Skip to main content

Nomination helps in smooth transfer of assets

Invest Mutual Funds Online

Download Mutual Fund Application Forms

Buy Gold Mutual Funds

Every time you fill a form for an investment or an asset, you always have to name a nominee of the proceeds of the same for smooth transfer of money in case of an eventuality. However, many feel this is a task and do not name a nominee.

Nomination is generally understood to be an act of officially naming a candidate (friend / relative / legal heir) who will receive the proceeds of investments / assets upon the death of the owner. It is applicable for shares, insurance policies, mutual funds, fixed deposits, bank accounts and so on. In spite of being a simple procedure, it is mostly ignored by individuals.

Other than finding it tedious, many feel that a nominee and legal heir is the same. And hence, in case of an eventuality, the legal heir will take over and so why name a nominee. However, these two individuals may not always be the same.

The definition and use of nomination varies across financial assets. Here's how:

Equities: The law on nomination of equities held in companies has taken a new meaning with perhaps the first interpretation of the provisions governing nomination in the Companies Act, 1956 by the Bombay High Court. It ruled that the rights of a nominee of shares of a company would override the rights of the legal heirs to whom the property may be bequeathed.

The Court opined that under the Companies Act, the relevant section provides that on death of a shareholder, the shares would vest with the nominee. The provision adds that the nominee shall become entitled to all the rights attached to the shares to the exclusion of all others regardless of anything stated in any other disposition, will or otherwise. Therefore, regardless of what is stated in privately executed wills, a company would have to only deal with the nominee as a person now exercising the rights of the deceased shareholder.

Taking note from the above decision, individuals have to be careful in nominating the right person for their demat account(s). More so, care has to be taken to avoid conflicts between bequests made in the will and nominations.

Mutual funds: Barring the above reference, till date for all other assets, a nominee is simply a custodian. Effective from April 1, 2011, nomination is compulsory across all new investments made in mutual funds. In case, an investor does not wish to nominate, then a separate declaration form of the non-intention of making a nomination has to be filed.

In case an investor has failed to provide a nominee, the applicable rules make it mandatory for the mutual fund company to send a request to the unit holder to register a nominee. In case of joint holders in mutual funds all holders have to sign the request for nomination / addition or deletion of the nomination.

In case of death of an investor, transfer of units in favour of the nominee shall be a valid discharge by the asset management company against the legal heirs. Investors should note that every new nomination filed for an existing folio / account will override the existing nominee.

Life insurance: In one of the very early cases on nomination (trustee versus legal heirs), the Supreme Court had held that a mere nomination made in a life insurance policy, under the relevant provisions of the Insurance Act, does not have the effect of conferring on the nominee any beneficial interest in the amount payable under the policy on death. The nomination only indicates the hand which is authorised to receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy.

The said amount however, can be claimed by the legal heirs of the deceased in accordance with the succession laws governing the deceased.

Thus, in case of life policies, it is important to have an appropriate nomination in place, to ensure that the proceeds are collected in trust.

Co-operative societies: Co-operative housing society, nomination ensures easy and hassle free transfer of the house. Every member of a society shall nominate a person(s) to whom in the event of his death, his right and interest in such societies shall be transferred. Nomination can be changed at any time. More than one nominee is permissible, provided they are of blood relations.

In case of co-operative societies, it is also necessary that there is a correlation between nomination and will. However, many individuals fear that nomination alone may not give ownership rights to nominees, in the same way as a will would do.

At this point, one can infer that a nomination process with the society would involve the owner, the Providing nominations is one of the most basic and simplest steps towards estate planning. Equally important would be to review nominations on a periodic basis

---------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

Best Performing Mutual Funds

    1. Largecap FundsInvest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap FundsInvest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap FundsInvest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap FundsInvest Online
      1. DSP BlackRock MicroCap Fund
    5. Sector FundsInvest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

Popular posts from this blog

Mutual Fund Review: Taurus Tax Shield

    Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering… The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then. The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund.   Strategy The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation. Fund Insight Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio. After b...

AXIS Long Term Equity Fund - The Best Tax Saver Fund for 2016

  AXIS Long Term Equity Fund - Invest Online   History:   The open ended mutual fund was launched on December 21 in the year 2009. It is benchmarked against BSE 200 and managed by the fund manager JINESH GOPANI. Initially the scheme was called as Axis tax saver fund but later it was renamed as Axis long term equity fund with effect from September 2, 2011. Nature of investment: As far as asset allocation is concerned, 97.52% of the stocks are equity and 0.02% is debt based. The primary focus of the fund is to invest in diversified equity stocks that have higher growth potential. Total asset size of the fund is in the tune of 4,996 CRORE as of June 30, 2015. Performance: The performance of the fund for one year, 3 years and 5 years are 23.6%, 29.9% and 19.1 respectively which are far greater than 6.4%, 14% and 5.6% benchmark figures. It has also preformed fairly well against SBI magnum Tax Gain (G) and HDFC tax saver (G). The growth comparison is enumerated below;                        ...

IDFC Classic Equity Fund

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   IDFC Classic Equity Fund IDFC Classic Equity is a large-cap equity fund which currently has assets under management worth Rs. 158.52 crore. It was launched in August 2005. The fund is benchmarked against the BSE-200 Index. Performance YTD 1-Year 3-Year 5-Year Since Inception IDFC Classic Equity 0.93 26.61 6.30 1.01 11.65 BSE 200 1.52 17.31 6.00 1.99 12.98 All figures in % as on January 31, 2013; Returns above one-year in CAGR terms ...

Health insurance guide - Part I

Insurance, by definition, is morbid. What if I die suddenly? What if my home caught fire? What if I had to undergo expensive medical treatment? What if something that I thought happened only to others befell me? Insurers, who work with large samples, calculate the probability of such an event and, hence, the possibility of them having to pay out a sum of money to mitigate, to the extent possible, the effects of that disaster. However, the possibility of you undergoing some kind of expensive medical treatment during your lifetime is far more likely than you dying suddenly or your house burning down. Given that costs at private healthcare facilities, where you are most likely to land up, is high, and, doubling every four years 10 months or so, the rest of your money life could easily go out of whack if you had to incur such expenses. Just 12 per cent of India's population is covered with some sort of health insurance. Pared to the bone, for a comparatively small price, health insu...

Use Mutual Fund SWPs for getting fixed payments

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   Investors time withdrawals optimally to save on tax The systematic withdrawal plan, or SWP, could be called the lesser known cousin of the much talked about and publicised systematic investment plan (SIP). There's yet another cousin — the Systematic Transfer Plan ( STP ). In SIP, you invest a fixed sum of money at regular intervals (monthly/ quarterly) to buy some units of a mutual fund scheme. In SWP, as the name suggests, you do the opposite: You redeem some mutual fund units from your portfolio to get a fixed sum of money at regular intervals (monthly/quarterly/half year/yearly). In SIP, you get a higher numbers of units when the markets are down, and lesser in a buoyant market. In SWP, going by the product logic, you redeem higher number of units when the markets are do...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now