Mr. X, 38, has worked his entire life to create wealth and property for himself and his family. Like many of us, he focused only on earning and accumulating wealth, ignoring the most important reality of life, that is, the inevitable, our death. Death may be untimely or premature (age related). COVID-19 exposed the ugly truth of untimely death, which left many families across the world either without their breadwinner or young children losing both sets of parents. Mr X was unfortunately one of the victims of COVID-19 and passed away untimely, leaving behind his homemaker wife and two children aged 7 and 10. The bereaved family found it difficult to make up for the loss, but were faced with another daunting task of ensuring that all properties in their names are transferred to their spouses. They realized that Mr X had failed to register his wife as a nominee to most of his property, nor had he drawn up a will. Due to this, their assets including their bank accounts were frozen for any transactions, leaving the family in dire straits. They were at the mercy of their relatives for survival till they were provided access to their frozen bank accounts and assets, for which her husband applied for a succession certificate, which in turn took 2-3 years to arrive Took till

This makes us wonder what about the benefits of owning an asset or a property that is of no use to the family when they need it the most? Also, like providing resources for the family, is it not the moral responsibility of the head of the family to plan for smooth transfer of assets in case of his death?

Let us now understand the options available for smooth transfer of assets to the legal heir(s).

1. Enrollment
2. will
3. Succession Certificate (if a person dies without property)

In this article, we will focus on nomination as an alternative to succession planning.

Nomination is the simplest and most effective way to transfer property to the legal heir. In fact it is the first step towards planning for smooth transmission. One can register a nominee in that asset, immediately after acquiring the asset. There is no cost involved in registering the nominee. More than one nominee can be registered in a property and their share in that property can also be defined. If share is not defined, then all the nominees will get equal share in that asset (share clause may differ from organization to organization).

A nominee will be either the ultimate beneficiary or the trustee of that estate.

Trustee vs Beneficiary
trustee
A trustee is the person who coordinates and receives the funds of the deceased. The decedent, during his lifetime, has to nominate this person to receive the income on his death. The trustee has no right over this amount/asset. He only acts as a custodian of this property which belongs to the legal heir. It may be noted that the nominee/trustee may also be the legal heir/beneficiary in the property.

beneficiary
A beneficiary is a person who has full and exclusive rights over the property of the deceased. The decedent, during his lifetime, has to nominate this person to receive the income on his death. Other legal heirs have no right over this property.

conclusion:
Different properties have different methods of dealing with a nominee. However, the underlying fact is that it is the most convenient and cost-effective method of transfer of property to a family member immediately upon the demise of the property owner. A nomination must be supported by a Will.

Views are personal: Author – Raghav S Roongta is associated with Roongta Securities Pvt. Ltd

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