Have you audited your nominee?:Important to update after marriage, divorce or childbirth, don’t make these 10 mistakes

We focus on investing in bank accounts, fixed deposits (FDs), mutual funds, and shares, but often forget to update the nominee information recorded in them. Many people do not review their nominee for years even after marriage, divorce, birth of a child, or any major change in the family. Later, this small oversight can become a big problem for the family. After the death of the account holder, the family may face delays in claiming money or investments. Legal complications can also increase. Therefore, today in ‘Your Money’, we will talk about nominee audit. We will also know that- Expert – Jitendra Solanki, Financial Advisor, Ghaziabad Question- What is a nominee audit? Answer- A nominee audit means periodically reviewing the nominee information recorded in all your financial investments and accounts. These include- If the nominee information is outdated or circumstances have changed, immediately updating it is called a ‘nominee audit’. Question: Why is it necessary to have a nominee? Answer- Having a nominee allows banks, insurance companies, or other financial institutions to quickly transfer money or investments according to a defined process after the account holder’s death. This simplifies the claim process. Question: What happens if there is no nominee in an account? Answer- In such a situation, the process of claiming the account holder’s funds after their death can be long and complex. Question: Does the nominee become the true owner of the money? Answer- No, typically the nominee only receives the relevant amount or investment. After that, they hand it over to the legal heirs. The final ownership is determined based on ‘Succession Law’ and the will (if any). Therefore, it is not necessary for the nominee and legal heir to always be the same person. Question: What is the difference between a nominee and a legal heir? Answer- Understand the difference between the two with these pointers- Nominee Legal Heir Question: Can only a family member be a nominee? Answer- No, it is not necessary to be a family member for this. However, some schemes or accounts may have different rules. Therefore, when appointing a nominee, be sure to check the rules of the concerned institution. Question: In what circumstances should the nominee be changed immediately? Answer- Nominee information should be updated immediately when there is a major change in life. See in the graphic in which situations the nominee should be changed-
Question: Do old nominees automatically change after marriage? Answer- No, the name of the previously registered nominee remains valid until the account holder updates it himself. Therefore, it is important to review nominee information in all investments after marriage, childbirth, or any major family change. The nominee should be changed if necessary. Question: Can an ex-partner remain a nominee after divorce? Answer- Yes, if the nominee information is not updated after divorce, the ex-partner remains the nominee. Divorce does not automatically change the nominee. Question: What problems will the family face if there is no nominee in the bank account? Answer- Understand with pointers- Question: Is a nominee necessary even in a joint account? Answer- Yes, it is necessary to appoint a nominee even in a joint account. Understand it this way- Therefore, it is essential to register a nominee’s name even in a joint account. Question: Can there be different nominees for a savings account and an FD? Answer – Yes, a savings account and an FD are two different banking products. The bank keeps separate records for both, and nominee information is also recorded separately for each product. Therefore- Question: Can more than one nominee be appointed? Answer – Yes, a maximum of four nominees can be appointed for bank deposit accounts (such as savings accounts and FDs). The account holder can choose between ‘Simultaneous’ or ‘Successive’ nomination methods. Let’s understand them one by one – Simultaneous Nomination Successive Nomination Question: Can multiple nominees be kept in a mutual fund? Answer – Yes, a maximum of 3 nominees can be designated in a mutual fund folio. The investor can also specify the share (percentage) of each nominee. If the share is not specified, all nominees are considered to have an equal share. Question: What is the risk of not having a nominee in a Demat account? Answer – There are several risks. For example- Question: Can there be different nominees for Demat and Trading accounts? Answer – Yes, Demat and Trading accounts are separate. Therefore, different nominees can be kept in both. However, for convenience, many brokers also provide the option to add the same nominee to both accounts. Question: Is it mandatory to have a nominee in life insurance? Answer- No, it is not legally mandatory, but it is extremely important to make one. Having a nominee ensures that the claim can be easily paid after the policyholder’s death, following a defined process. Question: What if the nominee is a minor? Answer- In such a case, an adult guardian is also nominated along with them. After the nominee turns 18, the nominee can claim it themselves. Question: Is there a difference between a nominee and a will? Answer- Yes, both are different things. Question: How often should a nominee audit be done in a year? Answer- At least once a year. Additionally, nominee information should be updated after marriage, divorce, birth of a child, death of someone in the family, or any other major life change.
Question: What documents should be listed when conducting a nominee audit? Answer- When conducting a nominee audit, make a list of all accounts, investments, and assets where it is necessary to add a nominee or update their information. See the checklist in the graphic-
Question: What are the 10 biggest mistakes in a nominee audit? Answer – It is important to update the nominee from time to time. In such a situation, some mistakes should be avoided. See in the graphic-
Nominee audit takes only a few minutes. But it can save your family from long legal and administrative troubles in the future.