It takes time and lots of efforts to build wealth and assets for your family. However, if you don’t have a nominee, your entire wealth may leave your family or dependents into a legal dispute and may even deprive them from acquiring your asset in case of your untimely demise.

When it comes to securing one’s wealth, selecting the right nominee is often an overlooked yet crucial decision. A nominee is a person appointed to receive the benefits of investments or assets in case of the investor’s demise. This choice holds immense significance as it directly impacts the security and distribution of your assets.

Understanding the Role of a Nominee

Before delving into the selection process, it’s pivotal to comprehend the nominee’s role. A nominee isn’t necessarily the ultimate beneficiary; their responsibility is to receive the assets and distribute them to legal heirs according to the deceased’s wishes or as per legal requirements. Therefore, it’s essential to choose someone trustworthy and responsible.

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Factors to Consider

* Responsibility: The foremost criterion is to select an individual known for their reliability and trustworthiness. Consider someone who can handle financial matters responsibly, understands your wishes, and is committed to fulfilling them.

* Relationship: Opt for a nominee with whom you share a close relationship and who comprehends your financial objectives. This understanding aids in executing your intentions accurately in case of unforeseen circumstances.

* Legal Requirements: Your nominee should be legally fit to avoid any legal dispute with other heirs in the future. He should be the right person who can carry the responsibility to handle your asset and make good use of it.

* Transparency: Choose a nominee with whom you can openly discuss financial matters. Effective communication ensures they understand your intentions and can carry out your wishes seamlessly.

* Multiple Nominees: Consider nominating more than one individual, especially if you have varied assets or investments. This helps distribute responsibilities and reduces the burden on a single nominee.

Steps to Appoint a Nominee

* Identify Assets: Assess all investments, insurance policies, bank accounts, and other assets that require a nominee.

* Nomination Procedures: Different financial instruments and institutions might have varying nomination procedures. Familiarise yourself with these processes to ensure accurate nomination.

* Documentation: Complete necessary paperwork accurately and ensure all documentation for nominee selection is in order. Double-check details to prevent any errors.

* Regular Review: Review nominee details periodically, especially after major life events like marriage, divorce, or the birth of children. Update nominees accordingly to align with your current preferences.

Regularly reviewing and updating nominee details ensures alignment with current intentions and prevents any discrepancies during claim settlements. Failing to update nominee details might lead to complications or disputes, impacting the timely distribution of assets.

Adhil Shetty, CEO, Bankbazaar.com, says, “You can have one of multiple nominees for your accounts. You can even decide what percentage of an asset each nominee will receive. This can save your family from a lot of hassle in case of your untimely death.”

Appointing nominees is especially important for high-value savings and investment accounts. “It is most critical for government-run services such as PF where the documentation process can be cumbersome. Some of your wealth may be tied to locker accounts, where you have stored gold and other precious items. Know about the locker usage rules and inform your family, too, so that they do not get locked out in your absence. If you are the single holder of this account, your nominee should be able to withdraw the locker’s contents after submitting a death claim,” adds Shetty.

While selecting a nominee is a personal decision, seeking advice from legal or financial professionals can provide clarity. They can guide you through legal intricacies, ensuring compliance with regulations and facilitating a smooth transition of assets. Nominating a reliable individual is a critical aspect of financial planning and asset distribution. Be diligent in this process, as it forms a crucial pillar of your financial planning.