Nomination is the process of appointing a person to take care of your assets in the event of your death. You can appoint a nominee for your bank account, fixed deposit, demat account, or even your house. A nominee can be a family member or a friend or any other person whom you trust. You need to choose a nominee with care as the person needs to be reliable enough to take care of your assets in the event of your death.
So when you open a savings bank account, or make a mutual fund investment, there is a space which asks for the nominee details. Nomination for joint holders is permitted, however in the event of death of any of the holders the benefits will be transmitted to the surviving holder's name. In the case of death of all holders the benefits will be transmitted to the nominee account.
Individuals holding accounts either singly or jointly can make nomination. Non-individuals including society, trust, body corporate, karta of Hindu undivided family (HUF), holder of power of attorney cannot nominate. The nominee appointed has to be a individual only. Only one person can be appointed as a nominee. It is not compulsory to appoint a nominee for each investment of yours. However, it is in your interest that you appoint a nominee for your investment so that in the event of your death, there is no difficulty in the transfer of your assets. In case you do not appoint a nominee while making an investment, you can also do the same at alater date by filling the relevant application form and giving it to the bank or mutual fund.
A minor can be a nominee. In such a case, the guardian will sign on behalf of the nominee and in addition to the name and photograph of the nominee, the name, address and the photograph of the guardian must be submitted.
Though a nominee is an important person, he or she has no right over the money or assets unless that is specified under the will or the nominee happens to inherit the money. So a nominee is a mere custodian of the assets. He is a contact point for the investments.
In the event of a person's death, a bank could get in touch with the nominee for further instructions to act on the account. At the time of claiming the savings, the nominee will have to give a proof of his identity to the relevant authority.
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