Meaning:-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 yourbank account, fixed deposit, demat account, or even your house. A nominee could be a family member or a friend or any other person whom you trust. However, since it involves financial matters, 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 typically, when you open a savings account or fixed deposit with a bank, they will ask you to fill a form where you need to mention the nominee’s name.
Role of the nominee:-Though a nominee is an important person, he or she has no rights over the money or assets unless that is specified under the will or the nominee happens to inherit the money. So as such a nominee is a mere custodian of the assets. He is a contact point for the investments. So 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.
Procedure to appoint Nominee:-Only individuals holding accounts either singly or jointly can make nomination. Non-individuals including society, trust, body corporate, karta of Hindu Undivided Family, holder of power of attorney cannot nominate. The nominee appointed has to be an 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 your interest that you appoint a nominee for your investment so that inthe event of your death, there is little difficulty in transferring your assets. So when you make an investment in a fixed deposit, there is a column where you can mention the name of the nominee. Similarly in the case of a mutual fund investment, there is a column where you can appoint a nominee. You can appoint only one person as a nominee. In case you do not appoint a nominee while making an investment, you can also do the same at a later date, by filling the relevant application form and giving it to the bank.
Appoint of Minor as Nominee:-Yes, a minor can be a nominee. In such 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.
Nomination by Joint Account Holder:-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.
Is Nominee a legal heir:- May be and may not be. A Nominee is generally appointed to take care of the account or estate, the proceedings will be transferred and it should be dealt as per law