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

Ms. Neha Gupta, aged 45, wants her investments in mutual funds and shares to pass smoothly to her husband and also name her mother as an alternative. Which statement best describes the role of nomination in this plan?

Nomination mainly lets the nominee take transmission of the asset smoothly, while ownership is ultimately decided by the will or legal heirs. So Neha should still make a will to direct who finally gets the assets.

  1. AA nominee always becomes the absolute owner overriding the will
  2. BNomination replaces the need for a will in all situations
  3. CNomination is mainly a facility for the nominee to receive the asset, and the legal heirs or will determine ultimate ownership, so a will should still be madeCorrect
  4. DNomination is not permitted for demat accounts

Explanation

Under the general legal position, a nominee receives the asset and holds it for the legal heirs or per the will, unless specific law provides otherwise. Hence a will is still needed to direct ownership. Demat accounts do permit nomination, and nomination does not replace a will.

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