Financial Prudence and the Importance of Nomination in Indian financial services sector
Financial prudence is deeply ingrained in the Indian psyche. The typical Indian tendency is to save diligently, invest in hard assets, and accumulate semi-liquid and liquid assets. This wealth-building approach aims to provide for the family during times of need and urgency.
To maintain legal prudence, it is highly advisable to register or update a nominee for all your financial assets and transactions. Having a designated nominee streamlines the process of transferring assets. However, failing to update the nominee can lead to complex challenges upon the demise of the asset owner.
Even a seemingly small oversight, such as not updating a nominee or a clerical error in registering or updating one, can create significant troubles during difficult times. In the unfortunate event of an account holder’s death, family members face emotional distress and must navigate lengthy and intricate legal procedures.
Without a registered nominee, settling a death claim involves gathering multiple documents, including death certificates, succession certificates, wills, or court orders. Therefore, ensuring proper nomination is not just a financial step but also an act of foresight and care for loved ones.
Understand who is a Nominee.
Nominee is a family member (an individual) who the holder of the account trusts and appoints as nominee. Nominee is authorized to receive the funds in the event of death of the account holder. Nominee may or may not be a legal heir. If the nominee is not the legal heir he or she will not be entitled to received funds. The nominee's duty becomes to act as the trustee and transfer funds to the legal heirs.
Why Nominations are important:
- When a nominee is specified, financial institutions can transfer the funds directly to their account without requiring complex legal procedures.
- If there is no nominee, the family or legal heirs will have to go through a long and complicated process to receive the investments and assets of the deceased person.
What Happens Without a Nominee?:
- If there is no registered nominee, legal heirs must:
- Obtain an affidavit from the nearest court.
- Submit the ID proof of the chosen heir who will receive the deposits.
- Attach the death certificate of the account holder.
- The bank will then transfer the funds to the legal heirs based on these documents.
Frozen Accounts:
- In some cases (like mutual funds and demat/trading accounts), not making a nomination can lead to account freezing.
- The process becomes cumbersome for grieving family members.
List of Financial Products where Nominee need to be updated
We are providing a comphrensive list of financial products where nominee must be updated to avoid complications at a later stage.
| Product | Where to Approach | Details |
|---|---|---|
| Saving Account | Bank Post Office |
Your Bank/Post Office where you are regularly doing transactions. If having more than one saving account, then Nominee Registration/Update is required be done in all saving bank accounts separately |
| Pension Account | Bank and Post Office |
Your Bank where your pension is being credited. |
| Fixed Deposit | Bank and Post Office |
Your Bank where you are regularly doing transactions. If having more than one Fixed Deposit (FD) account, then Nominee Registration/Update is required be done in all FD accounts separately |
| Recurring Deposit | Bank and Post Office |
Your Bank where you are regularly doing transactions. If having more than one Recurring Deposit (RD) account, then Nominee Registration/Update is required be done in all RD accounts separately |
| Insurance | Life Insurance Company and General Insurance Company |
Be it Life Insurance or General Insurance. Nominee has to be registered/updated with your Insurance Policy provider from where you have purchased it. |
| Mutual Funds | Mutual Fund and Mutual Fund Distributors |
Nominee details has to be registered/updated in your Folio Number provided by Mutual Fund where it has invested. If having more than one Folio's, then Nominee registration/Update is required be done in all Folio's separately. |
| Demat Account | Stock Broker | Contact your Stock broker. Nominee details has to be registered/updated with your all your demat accounts separately be it single account or joint account. |
| Provident Fund | EPFO and Your Employer |
If invested in Employee Provident Fund, contact EPFO Office to register/updated Nominee details. You may also approach your employer in case of queries. View partial list of EPFO Offices |
| NPS / PPF | Bank and Post Office |
Approach your Bank/Post Office where monthly/annual contributions to NPS / PPF are being deposited. |
| Post Office Accounts | Post Office | If holding any of the Post Office Accounts (Savings / FD's/ RD's / NSC / KVP etc) - approach your Post Office where your account/s is/are being maintained. Search your Post Office Address |
Posts
0 Comments