What every nominee must know

In Why smart investors nominate, we spoke of the importance of nominating your investments or at least holding them jointly.

We now discuss the implications if you are a nominee. In other words, we tell you how should you go about claiming the money if the person who has nominated you has passed away.

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Let's say your parent has nominated you and has passed away. To claim the investments, your word will not just hold. Or the fact that you are nominated.

You will need a few documents in place so that you are able to provide some information. Here is a broad outline.

1. A letter stating that the person has deceased and you would like the investment to be transferred to your name. In some cases, such as post office investments, you will be a given a form to fill out.

2. The death certificate is a must.

You need not give the original, a certified copy will do. What does a certified copy mean? It means the photcopy has been attested (certified as original) by a gazetted officer, a practising chartered accountant or advocate. It could also be attested by a bank manager where the deceased person maintained an account.

Alternately, it should be notarized. This means it has to be signed or stamped by someone like a Notary Public who is authorised to certify documents. A notary public, sometimes referred to as a notary or a public notary, is an individual authorised by the government to officially witness signatures on legal documents, collect sworn statements and administer oaths.

Why? Certain legal documents are required to be 'notarized' or attested in order to be recognised in court. The death certificate is one of them.

3. An indemnity bond.

An indemnity bond refers to a statement written by you on stamp paper absolving the other party of any responsibility. If you are asking that the mutual fund units be transferred in your name, this will basically absolve the mutual fund from any legal action arising out of such a transfer.

Don't worry about the wordings and text, the bank or the finance institution will tell you what it should be.

4. Information on the investment.

If it is an insurance policy, you will have to produce the insurance number and the policy papers. Similarly, if it is a mutual fund, you will have to provide the name of the scheme and account number. That is why documentation is so important.

5. Other information to keep ready is the date of the deceased individual's birth and death and mailing address.

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Nomination or Will?

In one way, a nomination is identical to a Will. Both are statements of who should get what if you are not around.

The key difference is that while a Will deals with all your financial assets and how they are to be divided among inheritors, nomination deals with one financial asset (such as a bank fixed deposit, savings account, life insurance policy).

You must ensure that your nominations and your Will state the same thing.

~ What if you nominate one person but your Will states another?

In that case, the Will supercedes the nomination; it has the final say on who gets what.

~ What if there is no Will?

If there is a nomination and no Will, then the nomination rules.

~ What if there is no Will and no nomination?

Then the amount will be paid to the legal heirs on production of the Succession Certificate or any other legal evidence to show that they are the heirs. You will apply in court for a Succession Certificate which should take a few months.

To avoid any complications, the best way is to nominate and draw up a Will. Remember, you don't need to have lots of money to do so. The moment you have an investment, any investment, be smart. Nominate.