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Estate planning · Nomination

Nominee vs Legal Heir: the difference that causes disputes

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A nominee in bank accounts, mutual funds, and demat accounts is not the owner after death, they hold the assets in trust for the legal heirs until distribution. However, for insurance policies and EPF, the nominee IS the absolute owner (special statutes override succession law).

Provisions

Companies Act 2013, Sec 72 | Banking Companies Nomination Rules 1985

Analysis

This distinction matters: if you nominate your son for your FD but your Will says 50% to your daughter, your daughter must sue your son to get her share. The bank will give everything to the nominee, they have no obligation to check the Will.

Close

  1. Life insurance, nominee is absolute owner (Insurance Act Sec 38/39)
  2. EPF/PF, nominee on Form 2 gets everything (EPF Act overrides succession)
  3. SCSS, PPF, NSC, nominee gets the deposit
  4. Bank FD/savings accounts
  5. Demat accounts (shares)
  6. Mutual fund units

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