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

Ms. Sunita Verma nominated her brother for her bank fixed deposit and mutual fund units, and her will leaves all assets to her husband and son. She dies. Under the prevailing legal position, which statement is most accurate about the brother, the nominee?

The brother can receive the proceeds from the institution, but he holds them for the persons entitled under the will or succession law. A nomination for ordinary bank and mutual fund assets does not by itself override the will.

  1. AHe becomes absolute owner because nomination overrides the will
  2. BHe receives the money only as a trustee for legal heirs entitled under the will or succession lawCorrect
  3. CHe is entitled to half the amount and the heirs to the rest
  4. DHe has no right even to receive the payout from the bank

Explanation

For most financial assets, a nominee is generally treated as a person entitled to receive the proceeds from the institution, not as the owner. The beneficial ownership follows the will or succession law. Hence the nominee holds the money for the legal heirs. Insurance policy nominations under Section 39 have a special position, which is not the case here.

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