Curated By: Business Desk
Last Updated: September 11, 2023, 13:14 IST
Nominees and legal heirs are separate parties.
A nominee can be a legal heir if they are nominated for assets and mentioned as the rightful legal heir in a will.
Finance Minister Nirmala Sitharaman recently urged banks to ensure nominee names are recorded in accounts. Currently, substantial sums of money remain unclaimed in banks due to the absence of designated nominees. In the event of the account holder’s demise, funds are generally transferred to the designated nominee. This raises questions about whether the nominee exclusively inherits the deceased assets and, if not, who the legal successors or heirs might be.
Let’s focus on the distinction between a nominee and a successor. Nominees and legal heirs are separate parties. While a nominee can also be a legal heir if they are nominated for assets and mentioned as the rightful legal heir in a will, it’s crucial to understand the key differences between the two.
A nominee serves a specific purpose and can be chosen by anyone. Heirs belong to the family but an individual has the option to designate an outsider as their successor if they wish. The key difference here is that if there’s no registered nominee, the bank cannot automatically assign someone as the nominee.
Nominees have no entitlement to an individual’s other assets. When someone appoints a nominee for their bank account, that person exclusively gains access to the transactions and funds within that particular account upon the account holder’s demise. Other assets remain unaffected by this designation. The Hindu Succession Act of 1956 lays down the guidelines for succession. Under this legal framework, all the assets of the deceased are transferred to the designated rightful heir.
In the absence of a designated nominee and with multiple heirs, the assets of the deceased account holder are generally divided equally among all the heirs, irrespective of any prior designations. Successors are categorised into two groups: Class 1 and Class 2. Class 1 successors include the mother, widow, wife, son, and daughter, while the father is classified as a Class 2 successor. The primary entitlement to an individual’s property is held by the Class 1 heirs.
If neither Class 1 nor Class 2 heirs are there, the property is shared among Agnates and subsequently Cognates. Lastly, if there are no eligible claimants within these categories, the Government assumes possession of the deceased individual’s property or estate.
