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.”
‘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.
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.
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