A nominee is not an heir — why your will still matters

Most people have nominated someone on their bank accounts, their provident fund and their insurance policies, and believe their affairs are in order. The nomination does something important but much narrower than they think.

What a nomination actually does

A nominee is a receiver, not an owner. The nomination tells the bank, the fund house or the insurer who to release the asset to, so the institution has a valid discharge. It does not decide who is entitled to keep it.

The Supreme Court has been consistent on this for decades: a nominee holds the asset for the legal heirs unless they are themselves the heir. In Shakti Yezdani (2023), the Court confirmed the position for company shares as well — the nomination does not override succession law.

The exception is insurance. Under section 39(7) of the Insurance Act, a nomination in favour of a parent, spouse or child makes them a beneficial nominee, entitled to keep the proceeds. For other nominees, the ordinary rule applies.

What decides entitlement

If there is a valid will, the will. If there is not, the personal law applicable to you — the Hindu Succession Act, the Indian Succession Act, or Muslim personal law — distributes the estate among a defined class of heirs in defined shares, regardless of what you would have preferred.

Intestate succession produces outcomes people rarely intend. Under the Hindu Succession Act, a man's property passes to Class I heirs in equal shares: widow, children, and mother. A flat you believed would go to your spouse is shared with your mother and every child. Nothing about the nomination changes this.

Where this causes trouble

Joint accounts with one child nominated. The nominated child receives the balance, and the other children have a legal claim to their share. Families that functioned perfectly well do not always survive this.

A second marriage. Children of the first marriage remain Class I heirs. Without a will, they inherit alongside the current spouse.

Property in one name, paid for by both. The contribution does not create ownership unless it is documented.

Business ownership. Shares passing to heirs with no interest in running the business, alongside a co-founder who now has unwanted partners.

Making a will

In India a will is simpler than most people expect:

• It can be handwritten or typed, on plain paper. No stamp paper is required.
• It must be signed by you and attested by two witnesses who saw you sign. Witnesses should not be beneficiaries.
• Registration is optional. It is inexpensive and makes the will harder to challenge, so it is usually worth doing.
• It can be revoked or replaced at any time. The latest valid will governs.

Name an executor. List assets by description rather than by current value, so the document does not go stale. Include a residuary clause covering anything not specifically mentioned — this is what prevents a forgotten account from triggering an intestacy.

Beyond the will

Keep nominations current. They still matter, because they determine how quickly assets are released. An outdated nomination — a former spouse, a deceased parent — causes delay at the worst time.

Leave a list. The commonest practical failure is not a legal dispute but a family that cannot find the assets. Bank accounts, demat accounts, insurance policies, PF and NPS accounts, property papers, locker details, and where the will is kept. One sheet, updated annually, told to one person.

Check your EPF and NPS nominations. Both are frequently left at whatever was entered when the account was opened, which for a job taken at twenty-two is often a parent.

Who needs more than a will

A private trust is worth considering where there is a dependant with special needs, a business with several family shareholders, assets in more than one country, or a blended family. For most people, a registered will, current nominations and a list of assets covers the ground.

None of this takes long. It is simply the kind of task with no deadline, which is why it is still outstanding for most families when it is needed.