If there is one thing that causes more confusion and more preventable family hardship in Indian estate planning than anything else, it is this: the difference between a nominee and a legal heir.
Most Indians who have registered nominees on their bank accounts or insurance policies believe they have resolved the question of who will receive their assets. They haven't — at least not entirely.
What Is a Nominee?
A nominee is a person you designate to receive and hold an asset on behalf of the legal heirs after your death. Under Indian law, in most cases, a nominee is a trustee or custodian — not the final legal owner.
This has important implications. If you nominate your brother on a bank account, your brother can claim the funds after you pass away. But your legal heirs — your spouse and children — retain the right to claim those funds from your brother. The nomination simplifies the administrative process; it does not override the law of succession.
There are exceptions. For life insurance policies, the Insurance Laws Amendment Act of 2015 granted beneficial ownership to certain nominees (spouse, children, parents). For shares in a demat account, SEBI regulations similarly grant beneficial ownership to nominees in some cases.
The safest approach: register nominees on every account, and also write a will that clearly expresses your intentions.
Where You Can (and Should) Register Nominees
- Bank accounts — savings, current, and joint accounts
- Fixed deposits — separately from your savings account
- Life insurance policies — at policy issuance, or update with your insurer anytime
- Mutual fund folios — you can nominate up to three people with percentages
- Demat and trading accounts — through your stockbroker or depository participant
- PPF (Public Provident Fund) — at your bank or post office
- NPS (National Pension System) — through your NPS account online portal
- EPF (Employee Provident Fund) — through the EPFO member portal (many employees neglect this entirely)
- Gratuity — through your employer's HR department
How to Choose the Right Nominee
Your nominee should be:
- Someone you trust absolutely to manage assets on behalf of the family
- An adult (nominees under 18 can be named, but a guardian must be specified to act until they come of age)
- Consistent with the intentions in your will — your nominee and your will should tell the same story
For large or complex estates, consider naming the same person as both nominee and executor of your will. This simplifies the process enormously.
The Nomination Audit: Do It Now
"Registered nominees are one of the most powerful tools you have. An unregistered nomination — or one you've forgotten — is one of the most common ways families get stuck."
We recommend doing a nomination audit at least once a year, and immediately after any major life event: marriage, divorce, the birth of a child, or the death of a previously named nominee.
LegacyOS's Nominee Management feature allows you to record all your nominees in one place, alongside your financial accounts and documents. This gives your family a single, complete view of what you own, who you've nominated, and what steps they need to take.