A few months ago I attended an online session with a lawyer on making a will. I will summarize that call seperately, but It broke one long held belief - that my nominee would automatically be the person entitled to my money.
For those interested in the legality and the long form of this difference, please check this article here which clarifies in great detail the difference between a nominee and legal heir.
Long story short, a nominee is a custodian of the money if I conk off. I had nominated my mother and the spouse depending on which side of the bed I woke up on the morning I filled the nomination. My thought process was - this money is easier accessed by him, or this one should ideally go to her! Turns out it is not that way at all!
In the absence of a will, the money can be contested by anyone who thinks they have a claim on it, and there are many other laws that can be invoked. Ideally, we need to have nominees and also a will to ensure there is no confusion.
Focusing on the nomination part - Today almost all new accounts mandate a nominee. But here is the list of accounts where you should ensure there is nomination done
All bank accounts - savings, current, fixed deposits
All PF accounts - EPF, PPF
All trading accounts
All demat accounts (surprisingly, demat and trading accounts have different nominations) - you may be able to do this via NSDL or CDSL website if your demat provider have enabled this.
ALL mutual funds - do this via the MFcentral application or website : Interestingly, this allows nominations to be updated, changed across MF houses as well as across direct and regular investments.
Insurance policies (while it may have been updated years ago, you may want to update it in case of change in relationships)
Any other assets you may hold such as e-gold
Oh, last but not the least - ensure you inform the nominee (or the ex-nominee) so that they know their rights/obligations and can exercise them when needed. I say when, not if, because the only thing certain, morbid or not - are death and taxes.
Did you also think that nominee = heir?
Yes :)
Nope. I knew!!!
Never thought about it.