NISM-Series-X-B: Investment Adviser (Level 2) · Case Studies in Comprehensive Financial Advice

Estate Planning and Succession: Will, Trust and Nomination for NISM X-B

Updated 11 October 2026 · Fact-checked

Estate planning is arranging how a client's assets pass to chosen people, with minimum dispute, delay and cost. To solve a case, list assets and heirs, check what each asset's title or nomination says, then pick the right tool: will, trust, nomination, gift or joint holding, and fix gaps.

Understand Estate Planning and Succession

Estate planning means deciding in advance who gets what, when, and under whose control. Succession is the legal process by which assets move to others after death. If there is no plan, the law of intestate succession applies. That depends on the person's personal law, such as Hindu, Muslim or Christian law, and may not match what the client wanted.

A will is a legal document in which the client states how their own assets are to be distributed after death. It takes effect only on death. The client can change or revoke it at any time while alive. A later amendment is called a codicil. The person who carries out the will is the executor. Heirs usually need probate or other court proof in some cases, which takes time.

A nomination is different. In most financial products, such as bank deposits, mutual fund units and demat accounts, the nominee is mainly a person who receives the asset on the holder's death so that the institution can discharge its duty. In general, the nominee is not automatically the final owner. Legal heirs or the will can still decide who ultimately owns the asset. Insurance is treated differently: a nominee under a policy may be a mere recipient or, in some cases, a beneficial owner, depending on the law and the nominee's relationship. Know this nuance and do not overstate it.

A trust is an arrangement where the settlor transfers assets to trustees, who hold them for beneficiaries under a trust deed. A trust can be a living (inter vivos) trust, created during life, or a testamentary trust, created through a will. Trusts help when beneficiaries are minors, have special needs, or are not good at managing money. They also allow staged payouts and continuity of management.

The adviser's role is to gather facts, explain the options, coordinate with a lawyer and tax professional, and review the plan after life events such as marriage, birth, death or a large asset purchase. The adviser does not draft the legal documents or give legal opinions.

Key formulas to remember

Will vs nomination: Will = decides final ownership of the testator's own assets | Nomination = lets the institution pay out safely; In most financial products the nominee is not automatically the final owner. Legal heirs or the will can override. Do not apply this blindly to insurance, which has its own rules.
Roles in a trust: Settlor creates → Trustee holds and manages → Beneficiary benefits; The trust deed sets the terms. Settlor and beneficiary can be the same person in some structures, but the three roles are tested separately.
Roles in a will: Testator makes → Executor administers → Legatee receives; A codicil amends a will. A later valid will revokes an earlier one if it says so or conflicts with it.
Intestate succession: No valid will → personal law of the deceased decides heirs; Shares may differ from client wishes, so this is a core reason to plan.
Takes effect timing: Will: on death | Living trust and gift: during life | Nomination: on death; Gifts and living trusts move assets earlier and can reduce probate dependence.

How to solve Estate Planning and Succession questions

Use this method for any estate or succession case. It keeps you from jumping to a favourite tool.

1Read the family facts: marital status, minors, dependants, special-needs members, second marriage, NRI heirs, business interests.
2List assets by type: bank, mutual funds, demat, insurance, property, business, gold. Note how each is held (single, joint, nominee named).
3Identify the client's wishes and the problem: dispute risk, minors, control, liquidity, tax, or lack of any document.
4Match tool to need: will for general distribution, trust for control over time or for minors and special needs, nomination for smooth transfer, gift or joint holding for transfer during life, insurance for liquidity.
5Check conflicts: nominee different from the intended heir, an outdated will, or assets held jointly that bypass the will.
6Check the limits of your role: refer legal drafting and probate questions to a lawyer and tax questions to a tax professional.
7Choose the option that solves the stated problem with the least complexity, then recommend periodic review.

Quickest way: Need-to-tool shortcut

When to use it: Use when the question gives a short scenario and asks for the most suitable tool or the main risk.

Underline the key phrase: minor child, control, no will, dispute, quick access, second family.
Minor, special-needs or spendthrift beneficiary points to a trust.
No will and many heirs points to a will, as the gap is distribution clarity.
Quick payout of a single account points to nomination.
Remove options that make the adviser draft documents or give legal rulings.
If two options remain, choose the one that is legally valid and fits the specific need.

Common mistakes in Estate Planning and Succession

Treating a nominee as the full legal owner of every asset.
The word nominee sounds like owner, and payout goes to the nominee first.
Fix: Remember that for most financial products the nominee receives on behalf of legal heirs or the will. Check the product before stating the rule.
Saying a will takes effect immediately on signing.
Students link signing with legal effect, as with a contract.
Fix: A will operates only on the death of the testator and can be changed until then.
Recommending a will when the problem is control over a minor's money.
Will is the best-known tool.
Fix: A will can pass assets to a minor but does not manage them long term. A trust, or a testamentary trust, gives structured control.
Ignoring assets that pass outside the will, such as joint holdings.
Students assume the will covers everything.
Fix: Check the title and holding pattern of each asset. Joint holding with survivorship and nominations can operate independently of the will.
Letting the adviser draft the will or give legal opinions.
Students over-focus on being helpful.
Fix: The adviser identifies needs and coordinates with a lawyer. Draft and legal opinion options are usually traps.
Treating the plan as one-time.
Students see a will as a finished document.
Fix: Review after marriage, birth, death, divorce, a big purchase or a change in law. Update nominations and the will together.

Worked examples

Example 1

A client has a bank deposit with his wife as nominee. His will leaves the deposit to his son. He dies. Who is ultimately entitled to the deposit, and what does the example show?

Show the solution

The nominee, the wife, is entitled to receive the money from the bank, as the bank gets a valid discharge.
A nominee is generally not the final owner of such an asset.
The will states that the son should receive the deposit. The will governs final ownership of the testator's own assets, subject to its validity.
So the wife receives the money first but holds it for the person entitled under the will, the son, subject to law.
The lesson is that nomination and will should be aligned.

Answer: The son is ultimately entitled under the valid will, while the wife receives payment as nominee. The client should align nominations with the will.

Example 2

A client aged 55 has two children, aged 8 and 12, and a spouse who has no experience managing investments. He wants his assets to fund the children's education and support the spouse, with a professional to manage the money. Which tool is most suitable, and what should the adviser do?

Show the solution

Identify the need: control over time, minor beneficiaries and an inexperienced spouse.
A nomination alone only passes the asset and gives no management.
A simple will passes assets but does not itself provide long-term management for minors.
A trust, either living or created through the will, lets trustees manage assets and pay out for education and support as the deed says.
The adviser should explain the option, help state the client's goals, and refer the deed drafting to a lawyer.
The adviser should also suggest a will to cover assets outside the trust and a review of nominations.

Answer: A trust is most suitable, supported by a will and aligned nominations. The adviser coordinates with a lawyer rather than drafting the deed.

Exam tips

For will vs nomination questions, ask who gets final ownership and who just receives payment.
If the scenario has minors or a dependant who cannot manage money, think trust first.
Reject options where the adviser drafts legal documents or gives binding legal advice.
Read the holding pattern: joint holding and nominations can bypass a will.
Look for the word review: updating the plan after life events is usually the right choice.

Practice questions from Case Studies in Comprehensive Financial Advice

Estate Planning and Succession in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CFA Level IIIEstate Planning Basics and Estate Taxes

Estate Planning and Succession: frequently asked questions

What is the difference between a will and a nomination?

A will states who should finally own the testator's assets after death. A nomination mainly lets a bank, fund house or depository pay out safely to a named person. In most financial products, the nominee is not automatically the final owner.

What is the difference between a will and a trust?

A will takes effect only on death and passes assets to heirs. A trust holds assets under trustees for beneficiaries under a deed, and can run during life and after death. A trust suits cases needing ongoing control, such as minors.

Does the investment adviser draft the will or trust deed?

No. The adviser gathers facts, explains the tools and coordinates with a lawyer and tax professional. Legal drafting is outside the adviser's role.

What happens if a client dies without a will?

The assets pass under the law of intestate succession, based on the deceased's personal law. The shares may differ from what the client wanted, and the process may be slower and more disputed.