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Thursday, March 29, 2018

Your nominee may not be your legal heir

Know the difference between nominee and legal heir 

While filling in the request for a online fixed deposit, the site popped an request to file in nomiation details for the fixed deposit. How strange is that? I was just blocking a small amount of money as a fixed deposit for a period of two years. It just stuck on my mind for a while and I assumed that it means incase of my death, the nominee would receive the money as a beneficiary. But my inquisitive mind doesn't stop that easily as I have been reading too much on the latest stories on e-will, importance of making a Will. I decided to do a brief study on the same, While doing an online research I came across numerous queries and news piece on the conflicts on this topic.  

The confusion over legal heir and nominee may even create fights and create chaos amongst family and close relatives. The question arise here is if nominee is requested for all large investments, why Will is required, isn't it natural that after demise of the individual, nominee is naturally handed over all the possession,? the answer I found here is different. While it is acceptable to nominate any family member for the assets, nominee only refers that he/she is eligible to take the handover of the possession incase of demise of the investor as a custodian or trustee. And the actual beneficiary of the assets will be the legal heir. 

The assets and properties include - assets like house, jewelery, art work, land, valuables, mutual fund, Insurance policies (Endowmwent, ULIPs, Term plans), Bank fixed deposits, company fixed deposits, bonds, PPF, NSCs etc.

Who can be a nominee and what is nominee's role?
Nominee can be any member of family - mother, father, brother, sister, husband, mother-in-law, sister-in-law, son, daughter etc, but they have to be a relative of the individual. Incase of no immediate family, one can make nominee outside family, however, incase he/she acquires family the previous nomination will be cancelled and a fresh nomination needs to be filed. Nominee is nothing but a trustee who is authorised to receive the assets/ funds post demise of the individual. It doesn't give the individual the right on the assets of the deceased.

Who is legal heir of your assets? 
Legal heir simply means the person who is legally inherit your assets and properties according to your Will, if will is not in place, it will follow the 'provision of succession law'.  As per succession law of Hindu, heirs are divided in two classes, Class I and class II. 

Class I heir has the first right on the assets and properties of deceased. It includes Sons, daughters, mother, widow, sons of predeceased son, widow of predeceased son. However, incase if the widow of the deceased son is remarried, she  wont be legal heir anymore. 

ClassII heir - Incase of absence of class I heir, Class II heirs have the right on the assets of the deceased. The class II heir includes Father, Brother, sister, niece and nephews.  

Registering a will is important and saves lot of hassles for the closed ones of the deceased, especially if you are clear about whom you want to passon your properties. So, to stay away from conflicts, make informed decision.  The nominee and legal heirs are two different things, you should keep in mind and educate your family members and near and dear ones for making informed decision. 

#HappyInvesting #moneystreets #legalheir #nominee 

Know the difference between nominee and legal heir

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