9 May 2021

Nominee vs Legal Heir - Who gets the cake?

 “Always mention the Nominee’s name in the form when you open a bank account, fixed deposit or any investment” - Anonymous.

You have a fixed deposit of Rs 50 Lakhs and your wife is the Nominee of this fixed deposit. One day you decide to make a WILL and put your Mother’s name as the legal heir of the above mentioned fixed deposit. In case of your demise, who gets this money? The nominee - your wife, or the legal heir - your mother?

Answer: The legal heir, in this case your Mother, gets the money from the fixed deposit.

We come across so many suggestions to always mention the nominee but not so much awareness is spread about making a Will. What role does the nominee play in succession? And what is the difference between a nominee and a legal heir?


The concept of nomination is common in most assets. A nominee is somebody who will receive the asset on the death of the owner. Legally, nomination is only a provision to receive the asset as a custodian. So, the nominee is a the custodian for a temporary period and once the legal heir is established, the nominee’s duty is to transfer the asset to the legal heir. The nominee can be the legal heir if it is mentioned so clearly in the Will.

The nominee should ideally be someone who can be trusted, and is capable enough of tending to the deceased person’s family and their needs. In case of multiple nominees mentioned in an asset (Bank account, insurance policy, etc.) the first nominee is usually given the entire amount but this could end up in a dispute. So now days the concept of beneficial nominee is catching up. However, even the beneficial nominee is simply a custodian till the legal heir is established as per the Will.

Legal Heir

The legal heir is the individual who has the right and is entitled to assets and property of the owner after the owner’s death. A legal heir can be a single person or multiple people as specified in the Will OR as per the Succession Act.

What if there is no Will or the legal heir isn’t specified?

If there is no will or legal heir mentioned, then the property will be distributed equally as per the Hindu Succession Act, under the following levels:

  • Class 1 heir: Equal distribution if no legal heir mentioned in the Will
  • Class 2 heir: Equal distribution if there is no Class 1 heir
  • Agnates and Cogantes: If there is no Class 2 heir
  • Government, if none of the above 3 are present

Now each Class has pre-defined set of relations and a simple google search will yield you the chart. You will be surprised to know that Father, Brother, Sister, etc. are Class 2 heirs.

How to make a Will?

A lawyer, fancy legal terminologies and a notary to notarize - you don’t need any of these really. All you need is a paper, simple words clearly specifying the legal heir / heirs, their share in property and two witnesses to sign the prepared Will. Ofcourse, hiring a professional can make the task easier for you in case you have multiple assets and multiple legal heirs.

We spend a lifetime working hard to earn money and create wealth. Creating a Will goes a long way to ensure that succession issues don’t arise after we are gone. Other wise, instead of enjoying the fruits of our hard work the next generation would end up fighting over the property.

If you found this post insightful, then you will definitely find our post on Health Insurance Guide insightful. In that post we talk about the MUST haves, Good to have and checks while buying a health insurance policy.

Do share this post with those who might find this topic helpful. A simple share can go miles in spreading financial awareness.

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