Nominee Vs Legal Heir

We all save money to ensure that our future life continues to remain as smooth as it is today. We care a lot to ensure a continued comfortable life for our loved ones, even if we were not around. We want the show to go on without any compromises on our present lifestyle. Each one of us does this in various ways and acquiring assets as we go along living our life. We acquire Real Estate, invest in Stocks, Bonds, Mutual Funds, Gold, Diamonds, etc. to ensure we accumulate wealth and at the same time preserve its value over time.

But, how many of us actually understand, or have put a thought to what happens on the day we do not return home?

How many of us have put in a serious thought and answered the following questions:

  • Who should receive my Assets?
  • How should my liabilities be settled?
  • How should my assets be apportioned / utilised?
  • Have I registered a nominee in all my investments?
  • If so, is the nominee trustworthy? Will the nominee be able to distribute my assets to my legal heirs as planned by me?
  • Have I written a will to let the world know my mind?

At this juncture it is essential to bring about a clarity on the subject of nomination.

Most of us are of the opinion that we have done our bit, once a nomination is registered on the Investment document. But, seldom do we realise that the legal position of a nominee is that of a trustee to discharge the various investment houses, and hold the wealth in trust, only to be passed on to the legal heirs of the original owner of the asset, in a manner considered justified by law or as per the valid will document.

Even in the case of an absence of a will document the legal heirs can seek recourse to law to ensure final possession of the assets. A nominee is merely a trustee and not the owner. He/she may temporarily possess the money, but will have to hand it over to the heir when the situation arises.

The only exception to the above rule is in the case of shares. Wherein, the Companies Act transfers all ownership rights in favour of the nominee.

The following is a Link to the column that appeared in the Business Standard clarifying this stance.

Nominee Vs Heir – BS13may10

So, it is high time we realise that we need to review our Investments portfolio, for a change, from a nominations perspective and support our thouthts with a valid Will Document.


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  11. Dear Sir

    The deceased has put a deposit in a bank which is a government of India undertaking The deceased has nominated three of his five children as nominees for the deposit The bank has also accepted the nomination and filed the nomination on bank records After the demise of the depositor the three nominees appointed by the deceased for the deposit want to claim the balance in the account equally amongst them i.e 1/3 of the balance in the account to each The bank authorities say as per Banking Companies ( Nomination ) Rules 1985 the nomination has to be made in favour of only individual and the nomination in which multiple nominees are appointed is not acceptable by the bank Meanwhile the other two siblings have also given a letter to the bank to claim their shares in the account balance Because of their claims the the dispute is there for the settlement The bank authorities say when the dispute is there for settlement the bank cannot pay the balance in the account to the nominee [ even if one individual is appointed as nominee as per Banking Companies ( Nomination ) Rules 1985 ] Because of the disputes as above the bank insists on the submission of legal heirs certificate for the settlement of claim

    I may kindly seek for your advice on the following points
    ( a ) – In the given situation as above whether three nominees appointed for the deposit by the deceased can ask the bank to pay 1/3 of the balance in the account to each [ i.e equal shares to all three nominees ] furnishing the proper identity to the bank
    ( b ) – The bank says multiple nominees are not acceptable [ but the bank has accepted the nomination initially in which the three nominees are appointed by the deceased for the deposit ] Based on this point whether the bank can refuse to settle the claim to all three nominees appointed by the deceased paying 1/3 of the balance in the account [ as explained above ] to each
    ( c ) – The other two siblings [ i.e siblings other than three nominees appointed ] have given complaints to the bank for their claims in the account balance Because the dispute is there for settlement whether the bank can refuse to settle the claim to all three nominees appointed by the deceased paying 1/3 of the balance in the account to each [ as explained above ]
    ( d ) In the given situation whether the bank is correct to insist on legal heirs certificate for settlement of the claim

    Your kind advice on this subject is extremely solicited please I may kindly request that the advice may please sent to my e-mail id



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