Most people believe that the nominee of a bank account inherits the funds if the account holder dies.

The legal position, on the other hand, is different.

Multiple court decisions and RBI notifications have established that "a nominee acts only as a trustee on behalf of the rightful legal heirs."

They hold the property/asset until the succession or inheritance issue is resolved by law.

Nomination helps the financial entity (Bank/MF/Insurance Company) in a smooth discharge of its responsibility through the transfer of the financial asset to the nominee. However, the nominee does not own the assets and only holds them on behalf of the legal heirs.

A valid Will, created by the asset owner, is the final arbiter to determine the inheritor of an asset.

In the absence of a valid Will, legal heirs are determined by various laws such as the Indian Succession Act, Hindu personal laws, etc.

Except for insurance policies, where a new concept of "beneficial nominee" was introduced in 2015, the rules apply to all types of assets.

Even the "beneficial nominee" feature, however, has some limitations.

Bottom line: The best way to ensure that your assets are distributed according to your wishes is to draw a comprehensive will covering all your movable and immovable assets.