SAFEGUARD YOUR INVESTMENTS THROUGH NOMINATION
ITS PROCESS
· Nomination simplifies the realization of investments in deposits, shares and mutual funds in case of the original owner’s demise.
· Certain investments even permit the nomination of a trust, religious or educational institutions.
· Others only permit individuals to be nominated.
· Most investment forms provide a space for selecting a nominee.
· If it is not filled up at the time of investing, other prescribed forms can be used later.
· Most investments allow more than one nominee and the percentage of share that each would be entitled to.
· The nomination form has to be filled up by all joint holders, irrespective of the mode of operation of the investment.
ITS NEED
· Nomination is even more critical when an investment is held in only one person’s name since death makes it difficult to access his funds till several formalities are completed.
· If nominees have been appointed, they can produce basic documents, such as death certificate, to access the funds of the original holder.
· The absence of a nominee may require more documentation, such as the probate of a will and certified list of legal heirs, before the investment can be transmitted or withdrawn.
· Nominees are deemed to hold the investment proceeds in a trust if it is disputed by legal heirs, pending a decision by the courts.
· Power of attorney (POA) holders are not authorized to make or change nominations or be appointed as nominees to an investment.
· Nominees can also have investments transferred in their names for redemption later.
· Nominations and joint holding are two of the simplest ways to identify beneficiaries for investments.
TIPS
· Ensure that the beneficiary is one whose future needs are taken care of by the specific investment.
· For instance, you can earmark some of your mutual fund investments for your son’s foreign education and make him the nominee.
· Similarly, your parents can be the nominees for your investments in fixed deposits and small savings schemes, while your wife can be nominated for your insurance policies.
· In this manner, you will ensure that the money earmarked for your dependents’ needs is available to them without any dispute even if you are not present.
· Maintain a dossier for your nominations, review and update them periodically, and keep the nominees informed so that there is no confusion later.
· If there is an option for more than one joint holder or multiple nominations in an investment product, you must use it so that the investment is protected even if one nominee passes away.
· Ensure that the provisions of your Will are in line with the nominations made to avoid disputes, as the provisions of the Will would take precedence over the nominations made.
· Decide whether to change the nominee status of your investments after marriage, or let it be.
· Change your nomination in line with the people you would like to benefit from the proceeds of the investment.
· You can change the existing nominations by canceling the original ones and making new ones.
· You do not require the consent of the earlier nominees for such cancellations.
· The role of nominees is only as recipients of the money when you are no more.
· As far as possible, you must nominate in a way that the chances of dispute are low.
· You can also make multiple nominations and specify the percentage of each nominee.
· If you are nominating your minor children, you also have to specify the guardian.