IS NOMINEE THE OWNER OF ASSETS?

IS NOMINEE THE OWNER OF ASSETS?

Contrary to popular perception that a nominee automatically inherits the assets
on the death of the owner, he/she simply acts as a trustee and holds the assets
only till the legal heirs are established. Only in the case of equity shares and EPF
monies, a nominee becomes the owner of the asset automatically. In all other
cases, the persons named in the Will, inherits the assets. In the absence of a Will,
succession laws will take over.

The nominee you name may not automatically inherit the asset after your death.
Surprised? Remember that a nominee is essentially a trustee, which means he
holds the asset only till the time the court passes an order of the actual legal heir.
Thereafter, the legal heir named in the Will, or those determined by succession
laws will inherit the asset.

Let’s briefly look at the position of the nominee in the case of different assets:

Insurance: On the death of the insured, the insurance company is supposed to
give the amount to the nominee mentioned in the policy. The nominee will then
distribute the amount to the legal heirs, according to the Will of the deceased. If
there is no Will present, then succession laws will be applicable, and the amount
will be distributed as per this.

Share in co-operative housing society: Similar to the case of insurance, share in the
housing society will only be temporarily transferred to the nominee. The nominee
has to then transfer the shares to the legal heirs as named by the Court, or as
mentioned in the Will. Further, the Maharashtra Cooperative Societies Act states
that the transfer made to the nominee will not result in vesting of the flat with him.
In case of a self-acquired property, the Will becomes the deciding factor. If there is
no Will, then the property will be treated as an inherited property. In the case of an
inherited property, the immediate family members of the deceased person will get
an equal share of the property. If there is joint ownership of an acquired property,
then the surviving owner will be the sole owner.

Shares in a company: The treatment with respect to shares in a company is
different compared to other forms of investments. Here, the Companies Act is
applicable, and the nominee named in the Demat account will legally inherit the
shares after the death of the person. In fact, in the case of shares, the nominee will
be the owner even if some other person is named in the Will.


Employee Provident Fund: Similar to shares, the amount in the EPF account of the
deceased person will be inherited by the nominee named therein. The nominee
will again supersede the person named in the Will. Nomination can also be done in
favor of multiple family members, mentioning the share each nominee will inherit.

Other assets: Apart from the above, nominees of other assets like mutual funds;
public provident fund and bank accounts (savings bank, fixed deposits) will also
not become automatic owners of the asset. The Banking Regulation Act specifies
that the amount in the account of the deceased should be distributed according
to the applicable succession laws.

As you can see, simply naming a person as a nominee will not make him the owner
of the assets, except in the case of equity shares and EPF monies. Therefore, we
recommend you to immediately make a Will.

Happy Investing

Source:Gettingyourich.com