FD: Many people make nominees for their insurance, bank FD and other movable and immovable assets including property. To many people this seems like drafting a will.
Actually it is not so. Let us tell you that the nominee is only a trustee, who has to distribute the property among the legal heirs mentioned in the will or as per the laws of succession.
Who is the nominee?
The nominee is the person who, after your death, transfers the money received from the insurance company, bank FD and property to your legal heirs. He is not the legal owner of that amount,
It’s just a trust. In simple words, the nominee is like a caregiver, who passes on our savings to our loved ones in our absence.
Who will get the money in case of insurance
Advocate Jitendra Samadhiya explains that as per Section 39 of the Insurance Act, 1939, the insurance company has to pay the amount to the nominee mentioned in the policy. The nominee will then distribute this amount among the legal heirs,
Which are mentioned in the will of the policyholder. In the absence of a will, inheritance laws will apply, and the money will be distributed accordingly among the policyholder’s heirs.
In case of property
According to Jitendra Samadhiya, will and succession laws work in the matter of property, the nominee has no special role. However, if you live in a co-operative housing society, you are required to appoint a nominee.
The nominee of the property in a housing society does not himself become the heir thereof. On the death of the owner, the housing society has to transfer the shares of the deceased to the nominee, who in turn transfers them to the legal heirs.
Bank accounts, mutual funds and other investments
Even in the case of bank accounts, mutual funds and other investments, the nominee does not automatically become their owner. This has been made clear in the guidelines of RBI.
There are different rules regarding Employees Provident Fund (EPF).
In case of EPF, the amount is received only by the nominee. As per the rules, you cannot nominate any person other than a family member in your EPF account.
You can also nominate more than one family member and specify the ratio to divide the EPF amount among them. In such a situation, this family member also becomes the heir of this money.
Why is the nominee important?
The work of the nominee begins only after the death of the person in whose name the insurance policy or other property is held. It is not easy to withdraw the insurance money from the insurance company.
In such a situation, having a nominee makes this process easier. Nominees are made so that in your absence your family members do not have to get into legal trouble.
To whom will the nominated person give the property in the absence of a will?
In such a case, the property is divided as per Indian Succession Law, Hindu Law and Mohammedan Law.
