While making any kind of investment, or purchasing a property, a person may specify their nominee. The facility of nomination allows the individual to name a person who will have the right to claim the investment or the property in case of their death. While making nominees is a common practice, it is not compulsory in most cases. Now, the question arises should you make some of your nominees?
Making someone your nominee allows a hassle-free transfer of your assets in case of your demise. A nominee, however, is different from a legal heir.
In the case of immovable property, a nominee is merely a trustee who is entitled to receive the proceeds on behalf of the legal heir of the property’s owner. In other words, nominees don’t have the absolute ownership of the asset. They are just custodians till the time an heir claims it. The division of the asset to the legal heir of the original owner is made based on the laws of succession or the will.
Having a nominee also ensures that property is not left unclaimed. A nominee can be anyone from the family, relative or any other person the original owner trusts. Nominees don’t necessarily have to be named while purchasing the property. The appointment can be made anytime and withdrawn as per the decision of the original owner.
Difference Between A Nominee And Legal Heir
A nominee may or may not be the legal heir of a person’s asset. For example, if a person nominates his elder son as the nominee in case of a property and has not left behind any will about the distributions, then, in this case, the person will be a nominee as well as the heir. However, in case the person has left a will where he specifies the distribution of the property, then the nominee will just be a caretaker.
A person can nominate anyone as their legal heir for the self-acquired property but the rule doesn’t apply to ancestral property. In that case, laws of inheritance apply in the division of such property.
In the case of naming a minor person as the nominee, a custodian must also be appointed to take care of the property till the time they attain a legal age.
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