Kolkata: Almost all of us make investments in one or more financial instruments. But after making the investment, many of us don’t remember to perform a small but significant action — putting the name of a nominee in the records. One must remember that the simple act of nominating a person or more than one person can save immense trouble at a later stage. The reasons are quite simple.
The purpose of recording a nominee is to ensure a smooth transition of assets to one or more beneficiaries whom the investor wants to hand over the wealth after he/she passes away. Therefore, it is clear that if a person is nominated while documenting an asset, it can help avoid a lot of confusion and dispute after the death of the owner of the asset.
Benefits of nominee
Simple asset transfer: When the account holder passes away, the organisation (bank, post office, mutual fund house etc) have no idea of knowing who the asset will pass on to. If there is a nominee recorded, the asset can be smoothly handed over to the person/persons on submission of proof of identity.
Minimised disputes: A big benefit of leaving a nominee is to minimise the scope of any dispute as to who will get the asset after the death of the owner of the asset. Else, disputes between family members or legal heirs about who should inherit the asset is likely to arise in almost all instances.
Legal validity: Having a nominee creates a sound legal ground for the institution concerned to transfer the asset smoothly and quickly after death. Thus its duty is quickly fulfilled.
Peace of mind: Since having a nominee paves the way for a hassle-free transfer of assets, it offers peace of mind the owner of the asset since he/she knows the wealth will not be locked up in dispute.
Once a nominee has been recorded, it can be changed again whenever the owner of the asset wants. Please keep in mind that a nominee is relevant to various financial instruments, including bank accounts, mutual funds, fixed deposits, life insurance policies and even demat accounts.
Who is eligible to be a nominee?
Usually any individual — family members, spouse, children, parents, relatives, friends — can be a nominee. Actually, it’s a designated individual or body who is supposed to inherit the asset once the owner passes away. Even a minor can be a nominee, but an adult guardian has to be appointed until the minor turns an adulthood.
After one makes an investment in any instrument from mutual funds to public provident fund or shares to national savings certificate, one tends to forget a very important adjunct — recording the name of a nominee. Please read on to know why you can never forget it. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
