When individuals open bank accounts , invest in mutual funds , or buy insurance, they are often asked to name a nominee .
However, many people mistakenly assume that the nominee automatically inherits the assets. In reality, the nominee is not always the final recipient — the ownership rights belong to the legal heir , reported ET.
Understanding the distinction between these two is essential to ensure that your wealth is passed on to the intended beneficiaries.
Who is a Nominee?
A nominee acts as a temporary custodian of the deceased person’s assets.
The nominee’s role is limited to holding and managing the assets until they are legally transferred to the rightful heirs.
According to ET, the nominee cannot sell, trade, or make any transactional decisions about the assets.
The account or policy owner can appoint anyone — family, friends, or acquaintances — as a nominee, though financial institutions often prefer close family members.
In some cases, the nominee and the legal heir can be the same person, which helps in ensuring a smoother transfer of assets.
Who is a Legal Heir?
The legal heir or beneficiary is the rightful owner of the assets once the original holder passes away.
To claim ownership, the legal heir must produce valid documents such as a will or other testamentary proof.
If there is no will — a situation known as dying intestate — the heir is determined as per the country’s succession or personal laws, reported ET.
While a nominee can initially access the assets, only the legal heir can claim them permanently or challenge ownership in court.
Experts quoted by ET emphasise that having clarity on this difference helps avoid disputes and ensures that the savings reach the intended family members or beneficiaries.
Therefore, it is advisable to regularly update both nominees and wills to align with one’s estate planning goals.
However, many people mistakenly assume that the nominee automatically inherits the assets. In reality, the nominee is not always the final recipient — the ownership rights belong to the legal heir , reported ET.
Understanding the distinction between these two is essential to ensure that your wealth is passed on to the intended beneficiaries.
Who is a Nominee?
A nominee acts as a temporary custodian of the deceased person’s assets.
The nominee’s role is limited to holding and managing the assets until they are legally transferred to the rightful heirs.
According to ET, the nominee cannot sell, trade, or make any transactional decisions about the assets.
The account or policy owner can appoint anyone — family, friends, or acquaintances — as a nominee, though financial institutions often prefer close family members.
In some cases, the nominee and the legal heir can be the same person, which helps in ensuring a smoother transfer of assets.
Who is a Legal Heir?
The legal heir or beneficiary is the rightful owner of the assets once the original holder passes away.
To claim ownership, the legal heir must produce valid documents such as a will or other testamentary proof.
If there is no will — a situation known as dying intestate — the heir is determined as per the country’s succession or personal laws, reported ET.
While a nominee can initially access the assets, only the legal heir can claim them permanently or challenge ownership in court.
Experts quoted by ET emphasise that having clarity on this difference helps avoid disputes and ensures that the savings reach the intended family members or beneficiaries.
Therefore, it is advisable to regularly update both nominees and wills to align with one’s estate planning goals.
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