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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Basics of Estate Planning

Caselet: Mr. Sandeep Rao, aged 62, has a flat worth Rs 80 lakh, a bank FD of Rs 20 lakh and mutual funds of Rs 30 lakh. He has a wife and two adult children. His draft will gives the flat to his son, the FD to his daughter, and the mutual funds to his wife. He has also named his wife as nominee in the mutual fund folio. He later signs a new will that leaves all mutual funds to his daughter. Which statement is correct after his death, assuming the later will is valid and properly executed?

The later valid will overrides the earlier one where they conflict. The wife as nominee only receives the units as a custodian, and ownership follows the will, so the mutual funds belong to the daughter as the legatee under the later will.

  1. AThe later valid will prevails over the earlier will, and the nominee holds the units on behalf of the legatee, i.e. the daughterCorrect
  2. BThe earlier will prevails because it was written first
  3. CThe nominee wife becomes the absolute owner of the mutual funds regardless of the will
  4. DThe two wills are merged and the funds are shared equally

Explanation

A later valid will revokes an earlier one to the extent of inconsistency. Under the prevailing view, nominee status gives the right to receive the assets, but ownership follows the will or succession law. So the funds go to the daughter as legatee, and the wife only has to hand them over.

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