Every time you fill out a form for an investment or a new bank account, there will be a part where you must mention a ‘Nominee.’ However, the majority of individuals have no idea what it means or what it entails. Throughout the course of this article, we will explain in simple terms what a nominee is and what it means to be nominated.
What is a nomination?
Nomination is a service that allows a deposit account holder, a mutual fund/other financial instrument investor, or a safe deposit locker holder to name someone to claim the deposit account, investment, or contents of the safe deposit locker after the original depositor, investor, or locker holder passes away.
What does it mean to be a nominee?
A nominee is someone you can designate in your investment or bank application as the person who will get the proceeds of your account if you die unexpectedly. Anyone you consider to be your first relative, maybe one of your parents, your spouse, or a sibling can be your nomination. Some investments allow you to name several nominees and even assign percentages of your account’s funds to them. If you don’t specify a percentage, it will be distributed evenly.
Nomination is an important task that many of us overlook, which causes a lot of unnecessary stress for our loved ones.
The Reserve Bank of India has released shocking data showing that there are thousands of crores of unclaimed deposits in banks across the country. These are funds in accounts where the original owner has not claimed the funds or has passed away without filing nomination data. This in and of itself demonstrates how difficult it can be to recover funds when no nomination has been made.
Adding a Nominee is as simple as going to your bank or mutual fund company and filling out a short form.
Points to Keep in Mind When Nominating
- Include the nominee’s entire name, age, address, and relationship with you.
- Do not nominate “wife” and “children” as a group in your submission. Give their full names and any other information you have at the time.
- If the nominee is a minor, appoint a major as an appointee and include his or her full name, age, address, and relationship to the nominee.
- It’s a good idea to set aside some time to go over all of your financial instruments, assets, bank accounts, and lockers for “nomination.” You will be of great assistance to them when they are most in need.
Significance of Nomination?
Nomination is crucial for one reason in particular. It facilitates the process of transferring a person’s assets to their nominee easier in the event of their death. If the person’s lawful heirs do not make a nomination, they will have to go through a longer process to obtain the assets and investments.