Published By: Business Desk
Last Updated: September 14, 2023, 07:00 IST
A nominee is someone chosen by a person to receive their money after they pass away. On the other hand, a legal heir is the person who inherits the wealth and property of someone who has died. Both nominees and legal heirs play an important role in matters related to investments and wealth of a person after his or her death. Knowing the differences between a nominee and a legal heir is also important for financial planning.
Think of a nominee like a caretaker who looks after the property until it can be given to the legal heirs. The legal heir actually becomes an owner of a part of the property and benefits from it.
In accordance with Indian law, the nominee will take possession of and maintain the deceased person’s property until the nominee is obligated by law to transfer it or share it with the deceased person’s legal heirs.
Who is a nominee?
A nominee takes care of something valuable, like a bank account or property, for the real owner or someone who benefits from it. But, the nominee doesn’t really own it. They just handle it based on what the owner or beneficiary wants.
If the person who picked the nominee passes away, the nominee can get the money, but only the legal heir has the right to own and get the things the person left behind, like wealth, properties and investments. The nominee is basically chosen by the person to work as the agent, caretaker or trustee of a person after his or her demise.
Who is a legal heir?
The legal heir is someone who has the right to inherit the belongings and property of a person who has passed away. The rules for who can inherit depend on the religion and domicile of the person who passed away. Once the legal heirs are identified, they can take control of and look after the assets and property left behind by the deceased person.
Key differences between a nominee and a legal heir
A legal nominee is selected by the individual themself to receive their assets, typically through nomination documents. On the other hand, a legal heir is determined as per the personal laws of the country. If there are no specific instructions or a will is not made by a person then the laws of succession come into play to decide who gets the inheritance.
It’s important to know that a will created by someone who has passed away holds more importance than a nomination for many assets. A will is the most important document because it clearly states what the person who made it wants to do with their belongings after they’re gone. So, a valid will has the authority to change or disregard any plans or nominations made while the person was alive.
If there is no will, then the Indian Succession Act, 1925, or personal laws will come into play to decide what happens to the person’s properties.