Nomination?
‘Nomination’ has different meanings depending on whether the asset
is property, shares, insurance or bank accounts. In most cases (except shares,
discussed later) nomination does not lead to ownership. A
nominee gets a charge of the assets and acts as a trustee but will have to hand
them over to the heirs if there is a Will. A nominee can also be an heir, but
not necessarily. Most often, though, you nominate
a person who you intend to be the beneficiary of a bank account, insurance
policy or asset.
Mr Punmiya points out that the Supreme Court of India ruled in 1984 that “A
nominee is a mere trustee with whom the (co-operative) society can initially
deal after the death of a member. All the legal heirs of
the deceased member have a right of succession to the property of the deceased
member and a nominee cannot exclude the other legal heirs.”
If you hold shares in demat accounts, then remember the recent Bombay High
Court judgement which held a nominee’s rights to be higher than those of an
heir. Legal expert Dr Israni says that the wording of the amended Section
(109A) of the Companies Act (dealing with nomination for shares) is such that
the Bombay High Court judgement will probably be upheld by other courts as
well, unless the government amends the badly-worded Section.
Section 109A (3) reads: “The nominee shall, on the death of the shareholder/s
or holder/s of debentures of the company become entitled to all the rights in
the shares or debentures… to the exclusion of all
other persons.”
WILL
A Will is not something we think of. Even the rare few who are tracking their
wealth are not thinking of it, though this number is growing, as our survey
shows. But a Will is an essential component of
your personal finance, especially since a lot of average people have become
wealthy, thanks to the rising value of their financial assets and real estate.
Make a Will now.
Know more about Wills
Some
Important Terms
Will: A legally-valid document that enables
you to choose who gets
your self-earned assets after your death.
Testator: A person making the Will.
Legatee: A person who inherits under the
Will.
Intestate: Person who dies without leaving a
Will.
Law Applicable to Intestate Succession: For
Hindus, Buddhists, Jains and Sikhs, the laws of inheritance have been codified
in the Hindu Succession Act, 1956. For Christians, the Indian Succession Act,
1925,
is applicable. Zoroastrians have a different law of inheritance. Similarly,
Muslims have their own law. That has, however, not been codified in any
legislation but is based on their religious texts.
There are two major sects of Muslims—Shias and Sunnis. Both have different laws
of inheritance.
Who Can Make a Will: A person who is not a
minor and is of sound mind. Finality of Will: A Will can be revoked any time
and updated as many times, under the Indian Succession Act.
Codicil: Changes to a Will or explain certain provisions, without rewriting
the entire Will. Must be signed by the testator and attested
by two witnesses.
Other Benefits of a Will: Wills can be made
for appointing executors, for creating trusts and for appointing testamentary
guardians of minor children.
Testamentary Guardian: A guardian appointed
through a Will. Single parents usually appoint testamentary guardians to take
care of minor children, if something were to happen to the parents.
Executor: An executor is a person appointed
by the testator to administer his/her Will. It is important that an executor
agrees to perform this role, because otherwise the court appoints an
administrator.
Registration: Registration is not mandatory
but it provides strong legal evidence of proper execution of a Will.
Probate: It is the copy of a Will certified
by a court, usually after checking, if other heirs have objections.
Nomination: A person can be nominated to
take charge of assets such as bank accounts, insurance and flats in
co-operative societies by filling the prescribed forms. A nominee is not
necessarily the heir or
beneficiary but only has the right to receive the asset.
Essential Components of a Will
* A Will has to be in writing.
* Only Muslims can make a valid oral Will. The law allows members of the armed
forces engaged in actual warfare/expeditions and mariners at seas to make an
oral Will. This is known as a ‘Privileged Will’.
* The law does not prescribe a format for a Will. It can be on plain paper and
can be handwritten (ensure it is legible).
* A Will must list and document all your movable and immovable assets and
clearly specify your bequests. It can be updated through a Codicil or can
contain a ‘residual clause’ to cover assets that are not specifically mentioned
or acquired later.
* You can only bequeath what you own. Providing proof of ownership of assets
avoids disputes.
* A Will must be signed in the presence of at least two witnesses. Every page
of the Will must be signed by the testator and initialled
by the witnesses in each other’s presence.
* The Will must contain the name, address of the testator as well as those of
the Witnesses. If an executor is appointed, he/she must be clearly identified
to avoid ambiguity or confusion.
Kinds of Wills
Conditional or Contingent Will: They come
into effect only if a certain event happens. A conditional Will is invalid if
the condition imposed is invalid or contrary to law.
Joint Will: A joint Will by two persons is
intended to take effect after the death of both; it will not be enforceable
during the lifetime of either.
Mutual Will:
Two testators confer reciprocal benefits—either of them constituting the other
as his/her legatee. These are usually made by husband and wife.
