Nominee = Temporary Custodian

Role:
- Holds assets on behalf of legal heirs
- Facilitates easy claim after death
- Acts as trustee, not owner
- Must transfer to legal heirs if demanded

Legal Status:
- Caretaker
- Not owner
- Fiduciary relationship

Legal Heir = Actual Owner After Death

Determined By:
- Will (if exists)
- Succession laws (if no will)
- Religion-based personal laws

Rights:
- Actual ownership of estate
- Can demand property from nominee
- Can sue for recovery

1. Sarbati Devi vs. Usha Devi (1984)
"Nomination does not confer any beneficial interest
on the nominee. It only enables the nominee to
collect the property on death of policyholder."

2. Shipra Sengupta vs. Mridul Sengupta (2009)
"Nominee is only a custodian of the policy money
and holds it in trust for the benefit of the
legal heirs."

3. Recent Rulings (2010s-2020s)
Consistent: Nomination ≠ Ownership

┌─────────────────────────────────────────┐
│ NOMINEE holds assets                    │
│         ↓                               │
│ LEGAL HEIRS have beneficial ownership   │
│         ↓                               │
│ Nominee must transfer to legal heirs    │
│ if they claim                           │
└─────────────────────────────────────────┘

Rules:
- Nominee can claim balance after death
- Bank releases to nominee smoothly
- But nominee holds for legal heirs
- Legal heirs can claim from nominee

Example:
Father nominates Son A
Legal heirs: Son A, Son B, Daughter
All three can claim equal shares
Son A must share with siblings

Same as Bank Accounts:
- Nominee gets easy access
- Must share with all legal heirs
- Nomination simplifies bank process
- Doesn't change legal ownership

Life Insurance:
- Nominee receives claim amount
- Holds for legal heirs
- But can use for family expenses

Exception - HUF Context:
- If premium paid from HUF funds
- Proceeds may belong to HUF
- Complex situations

Practical Reality:
- Insurance is often seen as for nominee
- But legally, heirs can claim
- Usually nominal disputes

MF Nomination:
- Nominee can claim units/redemption
- AMC transfers to nominee
- Nominee holds for legal heirs
- Transmission requires nominee signature

New Rules:
- Declaration from nominee required
- Stating holding as trustee
- Acknowledgment of legal heirs' rights

Demat Nomination:
- Nominee gets securities transferred
- Holds for legal heirs
- DP facilitates transmission
- No stamp duty usually

Process:
1. Submit death certificate
2. Transmission request
3. Securities in nominee's demat
4. Nominee distributes to heirs

PPF Nomination:
- Nominee receives balance
- Per PPF rules
- Legal heirs can claim from nominee

Special:
- Multiple nominees allowed
- Can specify percentages
- Update as family changes

Nomination Priority:
1. Family members first
2. Then as per EPF nomination
3. Or to legal heirs

Family Definition:
- Spouse
- Children (including adopted)
- Dependent parents

Property Nomination:
- Generally not applicable
- Property passes by will/succession
- Society/builder may have nomination
- Only for flat allotment convenience

Note:
- Property doesn't work like bank accounts
- Registration required for transfer
- Will or succession applies

Designed to:
1. Simplify claim process
2. Avoid immediate legal process
3. Provide quick access to funds
4. Help family during crisis
5. Prevent asset freeze

Not Designed to:
- Change succession laws
- Override will
- Give ownership
- Exclude legal heirs

Without Nominee:
1. Account holder dies
2. Bank freezes account
3. Legal heirs petition court
4. Succession certificate obtained
5. Submit to bank
6. Get funds (months later)

With Nominee:
1. Account holder dies
2. Nominee submits documents
3. Bank releases funds
4. Quick access for family

Wrong:
"I nominated my wife, so she owns everything"

Reality:
- Wife is custodian
- All legal heirs share
- Children can claim their share
- Will or succession law decides

Wrong:
"I nominated X, so will doesn't matter"

Reality:
- Will determines ownership
- Nominee must follow will
- Legal heirs per will are owners
- Nominee just facilitates transfer

Wrong:
"I nominated only one child, they get everything"

Reality:
- All legal heirs have rights
- Nominated child holds for all
- Other heirs can claim shares
- Succession law applies

Wrong:
"I've done nominations, no need for will"

Reality:
- Nomination ≠ Will
- Both serve different purposes
- Will decides distribution
- Nomination simplifies claim
- Need both!

Nominee Can Retain If:

1. Only Legal Heir:
   - Nominee is sole heir
   - No competing claims
   - All in one

2. Others Renounce:
   - Other heirs give up claim
   - Written renunciation
   - Gift deed equivalent

3. Will Gives to Nominee:
   - Will specifies same person
   - Nomination aligns with will
   - No conflict

4. Others Don't Claim:
   - Heirs choose not to pursue
   - Usually family understanding
   - Informal agreement

Situation:
Father dies, nominated elder son
Has wife + 2 sons + 1 daughter

FD Value: ₹20 lakhs
Nominee (elder son) claims FD

Legal Position:
- All 4 are Class I heirs
- Each entitled to ₹5 lakhs
- Elder son must share

Family Resolution:
- Often handled internally
- Or formal legal claim

Situation:
Man dies, nominated 2nd wife
Has children from 1st marriage

Insurance: ₹50 lakhs
Nominee (2nd wife) claims

Legal Position:
- 2nd wife gets share (say 1/4)
- Children from 1st marriage: shares
- 2nd wife must share with all heirs

Common Dispute:
- 1st family claims from 2nd wife
- Court may intervene
- Complex if no will

Situation:
Single person nominates friend
Has surviving parents

Mutual Fund: ₹10 lakhs
Friend is nominee

Legal Position:
- Parents are legal heirs
- Friend holds for parents
- Friend has no ownership
- Must transfer to parents

Best Practice:
1. Make a will first
2. Decide distribution
3. Nominate same persons
4. In same proportions
5. Document your intent

Review When:
□ Marriage
□ Birth of children
□ Death of nominee/heir
□ Divorce
□ Major asset changes
□ Every 3-5 years

Tell Your Family:
- Who nominees are
- What will says
- That nominee ≠ owner
- How assets should be shared
- Where documents are kept

Maintain:
□ Will copy
□ Nomination forms/receipts
□ List of all nominations
□ Contact details of nominees
□ Intent letter to family

Steps:
1. Demand letter to nominee
2. Mediation attempt
3. Civil suit for recovery
4. Succession certificate if needed
5. Court orders transfer

Time Frame:
- Can take months to years
- Legal costs involved
- Relationship damage likely

During Lifetime:
□ Clear will
□ Aligned nominations
□ Family communication
□ Written intent
□ Fair distribution

After Death:
□ Family meeting
□ Read will together
□ Agree on division
□ Document agreement
□ Execute transfers

Immediate:
□ List all nominations
□ Check if aligned with intent
□ Make/update will
□ Communicate to family

Ongoing:
□ Review annually
□ Update after life events
□ Keep documents accessible
□ Inform executor

Intent Letter (Optional but Helpful):

"I, [Name], wish to clarify that my nominations
for bank accounts, insurance, mutual funds, etc.,
are made for convenience of claim only.

The actual distribution of my estate shall be
as per my Will dated [Date].

All nominees are requested to distribute assets
to legal heirs as specified in my Will.

Signed: [Name]
Date: [Date]"

For Joint Accounts/Holdings:
- Survivor gets first claim
- Then succession applies
- Nomination after all holders pass
- Different from sole holding

If Nominee Is Minor:
- Guardian claims on behalf
- Natural guardian usually
- Court-appointed if needed
- Held in trust for minor

NRI Account Nomination:
- Same rules apply
- Nominee in India helpful
- Powers of Attorney useful
- FEMA considerations for transfer