Right Way to Nominate in Your Investments

10 Nominations Tips

  • Aligning your Nominations with your estate planning documents is essential.
  • Out–of–date or missing nominations can result in money and other assets not going to people you intended to receive them.
  • Understanding and maintaining correct nominations can make a difference in helping ensure your estate plan works.

Why Nominations are important?

Proper Nominations can provide a relatively easy way to transfer an account or insurance policy proceeds upon your death. However, if you’re not careful, missing or outdated nominations can easily cause your estate plan to go awry.

We often complete these nominations without giving it much thought, but they’re actually important and deserve careful attention. Here’s why: Nominations take priority over what’s in other estate planning documents, such as a will or trust.

For example, you may indicate in your will you want everything to go to your spouse after your death. However, if the nomination on your Bank Account policy still names your Mother, he or she may end up getting the proceeds.

Which products allow nominations

Here’s a sample of where you can do nominations:

  • Bank Accounts including Fixed Deposits
  • Provident Funds, EPF, PPF, GPF etc.
  • NPS
  • Life insurance policies
  • Demat Accounts
  • Mutual Fund Investments
10 Tips Nomination

Because you’re asked to do nominations on so many different accounts and insurance products, it can be difficult to keep up. However, it’s worth the effort; failing to maintain the nominations could mean money will go to the wrong place.

When you first set up your estate plan, go over all the nominations you previously made and align them with your plan. After that, you should review and update them regularly — a least once a year.

10 Tips about Nominations:

Because beneficiary designations are so important, keep these things in mind in your estate planning:

  1. Remember to name beneficiaries.If you don’t name a beneficiary, through nomination one of the following could occur:
    • The account or policy may have to go through court to obtain “Letter of Administration” or “Succession Certificate”. This process often results in unnecessary delays, additional costs etc.
    • The agreement that controls the account or policy may provide for “default” nominations. This could be helpful, but it’s possible the default beneficiaries may not be whom you intended.

    “It’s important to regularly review your estate plan to ensure it continues to meet your needs.”

  2. Update for life events. Review your beneficiary designations regularly and update them as needed based on major life events, such as births, deaths, marriages, and divorces.

    “Your beneficiaries may change over time, or you may want to add a beneficiary, for example, when a child is born. Keeping your designations updated will help make sure you don’t ‘unintentionally disinherit’ an important person in your life.”

  3. Read the instructions. Nominations are not alike. Don’t just fill in names — be sure to read the form carefully.
  4. Nominee is not the Owner of Funds. As per the Law a Nominee is not the owner of the Funds. He or She is just the caretaker of the Funds and has to distribute the funds to the legal heirs of the deceased. However in products like Life Insurance if the nominee is the Parent, Spouse or Children they become absolute owner of the funds.
  5. Coordinate with your will and trust. Whenever you change your will or trust, be sure to talk with your Estate Planner about nominations. Because these designations operate independently of your other estate planning documents, it’s important to understand how the different parts of your plan work as a whole.
  6. Think twice before naming individual beneficiaries for particular assets. For example, you establish three accounts of equal value and name a different child as beneficiary of each. Over the years, the accounts may grow unevenly, so the children end up getting different amounts — which is not what you originally intended.
  7. You can name a trust as beneficiary. Consult your Estate Planner to know when it is beneficial to nominate your trust as the Beneficiary. There are situations where it makes sense to name a trust — for example if:
    • Your beneficiaries are minor children
    • You’re in a second marriage
    • You want to control access to funds

    In cases like these, understand the legal and tax consequences before you name a trust as a beneficiary.

Next Steps

  • When creating, updating, or simply reviewing your estate plan, pay attention to your nominations.
  • Remember, nominations in some products might replace what you may have specified in a will or trust.
  • Put a reminder on your calendar to check your nominations annually so you can keep them up-to-date.


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