Wednesday, April 15, 2009


Have you ever wondered what happens to all the money in savings account, mutual funds , shares, bonds etc in a person's account , after his demise , in absence of a will? You would assume that it goes to the legal heir. Well it does technically,but not in practical sense. That's because I read somewhere that most of the money in such cases is not passed on immediately to the deceased's wife,children etc due to the legal cases filed from other family members. Everyone wants to claim a piece of the money left behind by the deceased and hence it gets stuck in legal wrangle. In effect , the basic reason of providing for his dependents by the person after his demise is defeated.Certainly, you would not want this to happen to your dependents. So what should you do? Well the answer is simple:Nominate the person whom you want to inherit your investments and savings in all your investments and savings documents.

What is Nomination facility? Nomination facility is an option available to us where we can choose to nominate the person whom we want to inherit our savings and investments in case of our demise.The application forms for every investment or saving option has the column where we can provide the nominee details like his/her name,DOB ,relation with you etc.The bank or the financial institution concerned will refer to this at the time of passing on your money to your dependents comes.

How will it help? Nomination facility seeks to eliminate the chances of legal wrangle after the person's demise and facilitates the access of money by the nominee as stated by the investor/account holder.It helps the nominee to get the money faster.

Who will it help? It helps both the primary investor/account holder and the nominee since it facilitates the transfer of money as per the primary investor/account holder's wishes.

What if its not there? In India, we still find lot of people not using this option. Lack of nomination facility creates a situation of uncertainty and can lead to delays in transfer of money to the person you would have wanted to. This can happen due to the legal cases filed by other family members claiming a part of that money as their rightful part.When that happens the person/s who you would have wanted to inherit your money will be left out in the lurch at the time when they probably need your money the most.

Where all you need to have nomination? Savings account, mutual funds,FDs, PPF, EPF, NSC,shares , bonds . In short wherever you have money invested or saved you must have a nominee . The nominee details need to provided to the bank/financial institutions in writing.

Who to nominate? This is your choice. You may nominate your wife,children etc. whom you would want your money to go to.In some cases like jointly held accounts, you may nominate more than 1 person as your nominee . In case you are nominating more than 1 person as your nominee , you can also specify the ratio in which they will get the money. For example you may want 60% of your money to go to your wife and rest 40% between 2 of your daughters.

Can I change the nominee details ever? Yes , you can change the nominee details as and when you want. The same needs to be intimated to the respective bank/financial institutions in writing.

What's the latest on this ? Recently , RBI has made it mandatory for banks to ask for nomination details from all its customers having saving account with them. The same detail will have to be mentioned on the passbook. You can not leave the nominee details blank, unlike earlier. In case , the customer does not wishes to nominate anyone, he will have to tell the reason for doing so in writing to the bank.This is big change which will hopefully make the whole process of deciding on the legal heir to the money in saving and other accounts much easier.
What about you? Have you nominated your loved ones for your investment and other savings? If no, then you know what should you do first thing tomorrow.
Stay wise n stay wealthy.

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