What is Nomination?
Nomination is a facility that enables a deposit account holder, investor in mutual fund/other financial instruments or safe deposit locker holder to nominate an individual, who can claim the proceeds of the deposit account, investment or contents of the safe deposit locker, post the demise of the original depositor, investor or locker holder.
Who is a Nominee?
A Nominee is a person whom you can list in your investment or bank application as the person who can receive the proceeds of your account in case of your unexpected death.
The nominee can be anyone you deem to be your first relative - your parents, spouse, kids, siblings etc. Some investments also allow you to have multiple nominees where you can assign percentages of your money to each one of them. If you don’t specify percentages, it is shared equally.
Why nominate someone?
In case of the unfortunate event of one’s demise, one’s family/ near ones go through a very painful and difficult time of coping up with the loss. To add to this, whether we like it or not, financial security and means is necessary for the surviving partner or your close ones. All banks and financial institutions have standard and simpler processes for settling death claims, where nomination is clearly mentioned in the account or folio.
However, in absence of nomination, process of settling a death claim may require a host of documents, including death, succession certificates, a will or a court order. Although it may sound simple on paper, it ends up being a long drawn process in real life and it is not a situation which you would want to put your loved ones at a time, which would anyways be an already emotionally painful situation for them.
Why is nomination critical?
Nomination is a critical activity which a lot of us miss out, which eventually creates a lot of unwanted hassle for our nearest ones.
There is startling data from the RBI which shows thousands of crores of unclaimed deposits lying in banks across the country. These are deposits which are lying in accounts where the original owner has not claimed the money, or deceased and had not filed nomination details. This by itself is a proof of how difficult it can be to retrieve your money where there is no nomination done.
It will take just a visit to your bank and mutual fund Company to add a Nominee by filling up a simple form.
Points to remember while doing Nomination
• Mention the full name, age, address and your relationship with the nominee.
• Do not write the nomination in favour of "wife" and "children" as a class. Give their specific names and particulars existing at that moment.
• If the nominee is a minor, appoint a person who is a major as an appointee giving his full name, age, address and relationship to the nominee.
It is advisable to take out some time to regularise “nomination” in all your financial instruments, assets, bank accounts and lockers. You will render them a huge help when they would need it the most.
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