Every time you fill up a form for an investment, whether it’s a Fixed Deposit or a Mutual Fund or even if you’re opening a new bank account, there will be a separate section that will ask you about a ‘nominee’. This seemingly innocuous column is often left blank by a lot of people who are investing or opening an account, but it shouldn’t be, and here’s why.
Who is a nominee?
A nominee is a person that you can list in your investment application or bank application as the person who can receive the proceeds of your account in case of your unexpected death. Your nominee can be anyone you deem to be your first relative – this could mean any one of your parents, your spouse or your sibling. Some investments also allow you to list multiple nominees where you can even assign percentages of the money in your account. If you don’t list the percentage, it will be shared equally.
Why nominate someone at all?
When an unexpected death happens, the money that lies in banks and as investments in the name of the deceased can be claimed by the legal heir of the deceased. Although this sounds simple on paper, it is a long drawn out process in real life. You will need a host of documents, including death and succession certificates and sometimes, even a court order. The funds that belong to the deceased will be held by the bank until they get the requisite documents and the entire process can take weeks before you get the money. However, if you had been listed as a nominee, either when the account was being opened or later, the process is far quicker because the bank can release the funds to the nominee with far less paperwork.
Bank Lockers Can Have Nominees Too!
It is important to know that it is not only accounts or deposits that can be held by the bank when someone dies unexpectedly, but also bank lockers. In case of sudden death, everything in the locker will be held by the bank until the requisite documents are produced if the locker doesn’t have a nominee. The reason I want to emphasize this is because most Indian women use the bank locker to store their jewellery and gold, and there might be a need for those valuables during these times of crises. It is additionally important to have a nominee for your bank locker if you live in a joint family set up or are newly married.
Don’t let your money be ‘unclaimed’
The Reserve Bank of India, in January of this year reported that an estimated Rs 8,000 crores of ‘unclaimed’ deposits were lying with banks across the country. An ‘unclaimed’ deposit is essentially a deposit without an owner. This could be because the original owner lost track of the deposit or is deceased and didn’t name a nominee. This massive amount is proof of how complicated it can be to retrieve money when nominees aren’t named. It only takes a visit to the bank to see if you have nominees to your account, and if there aren’t, you can nominate whoever you want by filling up a simple nomination form.
Women are additionally vulnerable to being exploited for money during times of sudden deaths – while no one wants or wishes for these situations to occur, ensuring that you have a nominee, and have been nominated in your partner’s and parents’ accounts will go a long way in making you feel more secure even in the face of future uncertainties.
Rupee Rani is a weekly column on finance for women. Write to us with your queries at rupeerani@thenewsminute.com.