Before we tell you the difference between Will and Nominee, let’s begin with a small quiz!

Mr. Ramesh is 50 years old and has a wife, son, and daughter. With both of his children well settled, he wanted his wife to be the sole owner of all the financial assets. So he nominated her in all his financial assets like FD’s Insurance policies, PPF, Bank Accounts, Mutual Funds, and shares. Who do you think now will be the rightful owner of these assets if he dies today?

You must be thinking as his wife was nominated in all documents she will be the owner but no that's incorrect. As per the Hindu succession Act his wife, children, and other legal heirs will have equal rights on all the assets of Ramesh.

Now let’s understand the legal definition of Will and Nomination.

What is a will?

A will is a legal declaration a person makes about the way they want their property managed or distributed after their death. Although a will is a legal document, there isn’t any prescribed form it must take. For instance, you don’t need to write a will on stamp paper and it can be either typed or handwritten. However, a handwritten will is preferred as it is more difficult to refute. According to the Indian Succession Act of 1925, anyone who is of sound mind and who is not a minor can make a will.

Who is a Nominee?

A person who receives the benefit in case of death of the insured person is a nominee. The insured person chooses or nominates his/her nominee at the time of buying the life insurance policy. The nominee is usually the spouse, children, or parents. The insured person can nominate one or more people as his or her nominee.

Why do we need a Nominee?

So you must be wondering that if the nominee does not become the sole owner, then why bother about the nomination at all? The reason here is when you die, you want to make sure that the Insurance Company or any other such assets should go to someone of your trust and in turn help legal heirs.

Is the concept of Nominee valid for all assets?

The answer is surprising - No. In the case of Shares, anyone who has been nominated by you will be the ultimate owner of the stocks. But if you have made a will, that will be the source of truth and not succession laws on inheritance.

“A reading of Section 109(A) of the Companies Act and 9.11 of the Depositories Act makes it abundantly clear that the intent of the nomination is to vest the property in the shares which include the ownership rights thereunder in the nominee upon nomination validly made as per the procedure prescribed, as has been done in this case.”

What do you take note of from the above story?

1. It is advisable to have Nomination in all your financial assets like Shares, Mutual Fund, PPF, FD’s and Bank accounts.

2. You must prepare your Will irrespective of your age. Will can be made on plain paper and can be modified any no. of times. Your last written will be used for any legal matters.

3. Try to make a nomination and will in favor of the same person so as to avoid legal matters.

In the normal course of life, we assume a lot of things which is too obvious but legally it can give us a shock. Will and Nominee is one such example.