Legal Heir versus Nominee: What you may Not Know

It is common to get confused between legal heir versus nominee when it comes to succession of benefits or assets. We often write the name of our loved ones as a ‘nominee’ in our banks accounts, Public Provident Funds, or other such investments.


This is on the presumption that after our death, the ‘nominee’ will get the said money or benefits. You would be surprised to know that this is far from the truth. In reality, it is the legal heir who would be entitled to the said benefits.


Let us understand the "legal heir versus nominee" nuance a little more in detail.


Who is a Nominee?


A nominee is a person who only holds money or asset ‘in trust’ upon a person’s demise. A nominee is not the owner of the assets but acts only as a caretaker in the eyes of law.


The law legally binds a nominee to transfer the assets to the legal heirs of the deceased. The legal heirs can claim the money from the nominee. However, a nominee can also be one of the legal heirs.


Nomination should be ensured as it is a very important aspect especially in bank matters, property matters, and all the financial products that you have bought or plan to buy in future.


The concept of nomination is to ensure that upon a person’s death, their assets go to someone trusted. This trusted person would further help in the process of distributing the assets to the deceased’s legal heirs.


When a person dies without nominating anyone, the task becomes tedious for the legal heirs. They will have to produce various kinds of certificates and proofs like death certificates, proof of relation, etc.


Therefore, if a nominee exists, the process is quicker with fewer hassles, and the assets are distributed as per the will. However, in the absence of a will, the succession laws on inheritance as per the religion of the deceased would be applicable.


Pertinently, nomination and will are two different concepts. Nomination does not enjoy the same legal status as that of a will. Mere nomination does not bestow beneficial ownership of assets to the nominees.


Who is a Legal heir?


A legal heir is a person who inherits the assets of a deceased person either by descent, relationship, or will. The legal heirs are the rightful owners of the assets of the deceased.


When it comes to legal heir versus nominee, legal heirs are free to make a claim over the assets against the nominee. A legal heir will be mentioned in the will, if any.


Therefore, it is very essential that one not only provides nomination in all the assets but also executes a will in order to avoid bitter conflicts within the family.


The only thing certain in our lives is death, so we should nominate and execute a will so our loved ones enjoy the fruits of our lifetime even when we are gone.