1. Nominations are used by service providers like AMCs, R&T agents, etc. to pay the proceeds after the death of the account holder as their liability ceases once they do this (read washing their hands off!).
2. Hence it is important to nominate wisely to make it easy for your immediate family members to realize the value of your investments when you are no more.
3. Alongside, it is equally important to carry out estate planning and draw up a succession plan by making a Will, as leaving assets like MFs without a documented bequest can lead to disputes and tedious legal procedures among "successors".
4. An investor should, therefore, focus on protecting, consolidating, preserving and properly bequeathing assets like MFs in an unequivocal manner.
5. Nomination merely simplifies the realization of investment proceeds in case of the original owner’s demise.
6. This is even more critical when an investment is held in one person’s name since death makes it difficult to access his funds till various formalities are completed.
7. If nominees have been appointed, they can produce basic documents, such as death certificate, to access the funds of the original holder.
8. 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such as the probate of a will and certified list of legal heirs, before the investment can be transmitted or withdrawn.
9. Nominees are deemed to hold the investment proceeds in a trust if it is disputed by legal heirs, pending a decision by the courts.
10. Nominations and joint holding are two of the simplest ways to identify beneficiaries for investments.
11. You need to make sure that the beneficiary is someone whose needs could be taken care of in the future by the specific investment.
12. For instance, you can earmark some of your MF investments for your kid’s foreign education and make him/her the nominee for them.
13. Similarly, your parents can be the nominees for your investments in FDs and Post Office savings, while your wife can be nominated for your insurance policies.
14. 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.
15. However, you should ensure that there is no incongruity in bequeathing these investments in your written Will as it supercedes all nominations in a court of law.
16. There will also be legal problems if the nominees refuse to part with the amount to the legal heirs and dependants, in the absence of a Will.
17. Therefore, you should consider changing your nomination in line with the people you would like to benefit from the proceeds of the investment.
18. You do not require the consent of the earlier nominees for such cancellations, as they need not be involved in any decisions related to the investments that you would want to make at any time.
19. Their role is only as recipients of the money when you are no more.
20. As far as possible, you must nominate in a way that the chances of dispute are low and your investments don't get stuck/misused.
21. You can even make multiple nominations and specify the percentage that eacheach nominee would be entitled to.
22. If you are nominating your minor children, you also have to specify the guardian.
23. A Will is considered a living document as you can make as many changes as you want depending on the changing circumstances during your lifetime, even if you are not able to change all nominations at short notice, because its provisions will prevail in a court of law.
24. Without a Will, the estate of the deceased is distributed according to the law of succession, where there can be conflicting claimants to the assets, and the issue may have to be settled in a court based on the complicated provisions of personal law and succession laws.
2. Hence it is important to nominate wisely to make it easy for your immediate family members to realize the value of your investments when you are no more.
3. Alongside, it is equally important to carry out estate planning and draw up a succession plan by making a Will, as leaving assets like MFs without a documented bequest can lead to disputes and tedious legal procedures among "successors".
4. An investor should, therefore, focus on protecting, consolidating, preserving and properly bequeathing assets like MFs in an unequivocal manner.
5. Nomination merely simplifies the realization of investment proceeds in case of the original owner’s demise.
6. This is even more critical when an investment is held in one person’s name since death makes it difficult to access his funds till various formalities are completed.
7. If nominees have been appointed, they can produce basic documents, such as death certificate, to access the funds of the original holder.
8. 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.
9. Nominees are deemed to hold the investment proceeds in a trust if it is disputed by legal heirs, pending a decision by the courts.
10. Nominations and joint holding are two of the simplest ways to identify beneficiaries for investments.
11. You need to make sure that the beneficiary is someone whose needs could be taken care of in the future by the specific investment.
12. For instance, you can earmark some of your MF investments for your kid’s foreign education and make him/her the nominee for them.
13. Similarly, your parents can be the nominees for your investments in FDs and Post Office savings, while your wife can be nominated for your insurance policies.
14. 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.
15. However, you should ensure that there is no incongruity in bequeathing these investments in your written Will as it supercedes all nominations in a court of law.
16. There will also be legal problems if the nominees refuse to part with the amount to the legal heirs and dependants, in the absence of a Will.
17. Therefore, you should consider changing your nomination in line with the people you would like to benefit from the proceeds of the investment.
18. You do not require the consent of the earlier nominees for such cancellations, as they need not be involved in any decisions related to the investments that you would want to make at any time.
19. Their role is only as recipients of the money when you are no more.
20. As far as possible, you must nominate in a way that the chances of dispute are low and your investments don't get stuck/misused.
21. You can even make multiple nominations and specify the percentage that eacheach nominee would be entitled to.
22. If you are nominating your minor children, you also have to specify the guardian.
23. A Will is considered a living document as you can make as many changes as you want depending on the changing circumstances during your lifetime, even if you are not able to change all nominations at short notice, because its provisions will prevail in a court of law.
24. Without a Will, the estate of the deceased is distributed according to the law of succession, where there can be conflicting claimants to the assets, and the issue may have to be settled in a court based on the complicated provisions of personal law and succession laws.