Knowledge Sharing piece on “Importance of Nominations and how Not Nominating can affect your family's entitlement to your assets” ~ Family Office Team

Did you know? An exorbitant sum of ?42,272 crore was lying as unclaimed deposits with both public and private sector banks at the end of March 2023; and one of the reasons for this is no nomination registered in the bank account of the deceased account holder!...Read more about it:

Recently the Reserve Bank of India in its campaign for consumer awareness has got actor Amitabh Bachchan to drive home the importance of nomination!

Q. So, who is a nominee? Is he the owner of the assets on one’s passing away?

A. No! Nominations are only for convenience and only legal heirs are entitled to inherit the assets of the deceased.

Nominee is only a trustee one appoints so as to provide for passing over of the assets to one’s legal heirs in case of eventuality. The nominee like an executor to your Will or an administrator of your estate, collects the assets from the bank and ensures that the legal heirs get those assets in a hassle-free manner.

In the absence of a nominee to a bank account, the legal heir who is entitled to an account will need to provide sufficient proof to the bank that he is the only legal heir of the deceased account holder and submit various legal documents like death certificate, legal heir certificate, succession certificate or a court order.

Let us take an example, in case of demise of father (male Hindu) who had a bank account, the multiple claimants i.e., his Class I heirs will be his mother, his wife and his children (in equal proportion). In absence of nominations to the bank account and in the absence of Will, these Class I heirs will have to make an application to the bank along with a copy of the death certificate of the account holder, the claim form, and the address and ID proof of each claimant. If things are hunky dory in the family and the assets are to be transferred to only one of them, then the other heirs will have to sign a letter of disclaimer, relinquishing all rights to the assets in favour of the claimant.

A simple Will which comes into effect post demise of the person writing the Will, is a legal declaration listing down the specific assets and the wishes of the owner with respect to his/her property that he desires to be carried out.

Intestate succession, i.e., one passing away without writing his/her Will is governed by personal succession laws and further differs for males and females, for instance, in the case of a female Hindu her Class I heirs are her husband and children, while in case of male Hindu it is his mother, wife and children.

Various administrative hassles like obtaining a Legal Heir certificate or physical presence of all the surviving heirs in various government authorities or banks, etc., court intervention may be required to distribute the assets all of which may disrupt family harmony while relations are cordial. Indian Succession Act, 1925, Section 59 provides that every person who is of sound mind and is not a minor can make a Will.

While your nominations in bank accounts have been updated at the behest of Mr. Amitabh Bachchan, please do not wait for him to come, and tell you the benefits of writing a Will. Do list down your wishes in a simple Will and ensure your money does not become part of the unclaimed amount lying with RBI!

For your views on the above or further interest/queries concerning Family Office and Succession planning, you can reach out to us! at: [email protected] - 9619331806 / [email protected] - 9930907424.