Affect on Inheritance by Property Nomination
Jun 08, 2018 Legal Guidance
Most of us are aware of the nomination part while making investments in a bank, mutual funds, or while registering a property. The rules and implications for the immovable property for the nominee are however different than others.
Indian parliament recently disclosed that the deposits of around Rs 5,124. 98 Cr was lying unclaimed by the scheduled banks in India. The amount could have been significantly lower if the buyer at the time of registration appointed a nominee.
To start with, let us first discuss what is nomination? The nomination is a process where the owner, at the time of registration, authorises someone who will receive the assets upon their death. The assets then must be passed to the legal heirs by the nominee.
Indian parliament recently disclosed that the deposits of around Rs 5,124. 98 Cr was lying unclaimed by the scheduled banks in India. The amount could have been significantly lower if the buyer at the time of registration appointed a nominee.
To start with, let us first discuss what is nomination? The nomination is a process where the owner, at the time of registration, authorises someone who will receive the assets upon their death. The assets then must be passed to the legal heirs by the nominee.
Rights of a nominee and legal heir:
It is a general perception that nominee is the legal heir to the property, which isn’t true. The nominee holds the assets and then transfers it safely to the legal heir. The nominee becomes the trustee in some cases and holds the property on behalf of the legal heir.
Under the insurance act, the insurance company is free of any liability after it transfers the assets to the nominee. Afterwards, it is the responsibility of the nominee to transfer it to the legal heir.
In case of provident funds, the nominee becomes the legal owner and beneficial owner of the demat account, after the demise of the owner, according to the law.
People residing in the cities generally live in cooperative societies. According to Section 30 of Maharashtra Cooperative Societies Act, if the owner has submitted the nominee form, then the society is legally allowed to transfer the property in the name of the nominee. However, the nominee that is listed as the owner of the housing society represents the legal heir. It is only the heir who has beneficial ownership to the property.
Under the insurance act, the insurance company is free of any liability after it transfers the assets to the nominee. Afterwards, it is the responsibility of the nominee to transfer it to the legal heir.
In case of provident funds, the nominee becomes the legal owner and beneficial owner of the demat account, after the demise of the owner, according to the law.
People residing in the cities generally live in cooperative societies. According to Section 30 of Maharashtra Cooperative Societies Act, if the owner has submitted the nominee form, then the society is legally allowed to transfer the property in the name of the nominee. However, the nominee that is listed as the owner of the housing society represents the legal heir. It is only the heir who has beneficial ownership to the property.
What should one do?
People should list a nominee wherever it is required. In most of the cases, the heirs are the nominees. It helps in speeding up the transfer process of the assets. It also makes sure that the property doesn’t remain unclaimed and gets wound up in litigation. One thing to keep in mind is that, while making investments in provident funds and shares, the nominee is the sole owner and the asset is not transferable to the heir.
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