Nomination & its Importance
Who is a nominee?
A nominee is a person in whose name assets, securities and other investments are transferred for the purpose of transaction and distribution. However, the actual ownership of the asset lies with the owner, who is also the nominator. Nominees are appointed for property, insurance, mutual funds, stocks, bank deposit accounts and safe deposit accounts to name a few.
Why is a nominee appointed?
The purpose of appointing a nominee is to have someone who is trustworthy and responsible to handle the nominator’s assets after his death.
What is the role of a nominee?
According to most of us, ‘nomination’ means that the asset/property will be transferred to the nominee after the death of the nominator. However, nomination means a ‘right to receive’ the asset and ‘not to own it’. A nominee is responsible to manage the asset as per the nominator’s wishes after his death. But a nominee cannot sell the property unless he is a legal heir.
What is the benefit of nomination?
The appointment of a nominee leads to less complications at the time of claim and distribution of the asset in the event of the death of the owner. The legal heir can also be made the nominee in many cases to avoid tedious procedures.
How to appoint a nominee?
In case of most investments, the owner will be required to fill out a form during application with the particulars of the nominee and sign wherever required. Witnesses may also be required, depending on the specification.
Can a minor (below the age of 18) become a nominee?
In case of making a minor a nominee, the owner will also need to appoint another person, above the age of 18, who can legally receive the proceeds in the event of the death of the owner/holder.
Can there be multiple nominees?
One can appoint multiple nominees for receipt of the proceeds and, in some cases, can also specify the desired share to be given to each nominee.
Can a nominee be changed once appointed?
Yes. A nominee can be changed time and again. The owner would have to contact the company or bank with the request and follow the necessary procedures required by them.
What is a Will?
A Will is a legally-valid document that enables the owner of the property/assets to choose who gets his assets after his death. Thus, a Will becomes operative only after death.
Why is it necessary to make a Will?
It is necessary to make a Will because a Will establishes the intention of the person that after his death assets will only be given to those people who have loved and cared for the person making the Will.
What are the important terms about Wills?
- Testator is the person making a Will.
- Legatee is the person who inherits under the Will.
- Intestate is the person who dies without leaving a Will.
- Executor is the person who has been nominated in a Will to carry out the wishes of the testator’s Will after he dies.
- Beneficiary is person who receives his share under the Will.
- Codicil means when the testator has to make minor changes in the Will.
- Main elements of a Will: The name and identity of the testator, two witnesses and their addresses, the list of assets and their distribution.
How to make a Will?
A Will must have a complete list of the testator’s assets and liabilities and details of their distribution in simple and easy-to-understand language.
A Will should be signed by the testator (the person whose Will is being made) in the presence of at least two witnesses.
A testator must be of sound mind when making a Will. Also, the full names and addresses of the witnesses should be indicated in the Will. A witness should neither be a beneficiary nor an executor of the Will.
What if you want to make changes or make a new Will?
A Will can be changed any number of times but it is only the last Will that is taken into consideration.