Every time you open a bank account, get an insurance policy or invest in mutual funds, you are required to submit several documents which include a column on ‘nomination’.
Many people tend to leave this column blank while filling the form to avoid filling details which may require extra effort. But it should be avoided as this is the only way their loved ones can be financially secured.
Nomination is the right conferred upon the holder of a bank account to appoint one or more persons who will be entitled to receive money upon the death of the account holder. In the event of death of an account or locker holder, investment holder, the financial institution can release the account proceeds or contents to the nominee without insisting upon a succession certificate, letter of administration or court order.
A nominee can be anyone from your family members, including parents, spouse or siblings in certain cases.
The nominee holds the funds in trust for the benefit of the legal heirs of the deceased person. Payment to the nominee acts as a valid discharge to the bank. Signatures of the account holders need not be attested by witnesses.
However, for nomination requests with thumb impression, two witnesses are required.
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