Understanding the importance of nominee in succession planning

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Succession planning is a very sensitive topic to talk about as it resonates with our loved ones being deceased. At the same time, it calls for the transition of asset ownership to a newer generation.

Succession planning is a complex matter to begin with, so understanding few facts would save you from a lot of conflicts and misunderstandings in the family.

That said, are you aware that the nominee for an asset stands different from the legal successor or heir to that asset? Further, being the nominee for an asset does not automatically confer ownership upon you upon the death of the original owner?

If you want to ensure that your legacy is passed on to the proper legal heir, designating the ideal nominee may not be sufficient. Therefore, what should you do to ensure that your intended beneficiaries receive your assets upon your death? Here are some critical issues to consider.

So why is it necessary to nominate?

-Nomination is required to appoint one or more individuals to accept the asset as custodian following the original owner’s death. The nominee’s responsibility is to act diligently in transferring possession of the asset to the rightful beneficiary.

-Nominations are accepted for all forms of investments, including mutual funds, money market funds, stocks, savings accounts, and fixed deposits bank accounts, as well as insurance products.

Role of nominee

-A nominee is someone who inherits the right to claim an asset upon the owner’s death and acts as the property’s custodian until it is transferred to the legal heir (s). On the other hand, legal heirs are those who inherit property following the death of the original owner.

-The legal heirs are named in a will created by the asset’s original owner or in accordance with succession legislation. However, a nominee may also be a legal heir whether his/her name is listed in the will.

-A nominee is only entitled to the assets upon the owner’s death. When investing in a financial product or creating a bank account, it is critical to complete the nominee information. Never omit the nominee field.

-If you failed to include the nominee’s information in any of your bank accounts or investments, you could do so by submitting the nomination form. Additionally, you can replace or add a nominee to your assets at any time by submitting a nomination modification or amendment request.

-When writing the nominee’s information, be sure to include the nominee’s date of birth, relationship to the nominee, address, and other pertinent information. It is encouraged to review the nomination details regularly and adjust the nomination as circumstances change in the future.

-Depending on your needs, you may select different nominees for different assets; for example, you may use a separate nominee for your bank-issued fixed deposits and mutual fund investments. You must, however, maintain a record of the nominees for various assets and investments.