Should nominee get the money? This is one of the most common questions people ask in banking.
Introduction
Most people believe that a nominee becomes the owner of money after the account holder’s death.This is wrong and incomplete information.A nominee only collects the money — the final ownership goes to the legal heirs.
Understanding nomination rules is extremely important to avoid disputes in banks and court.
To understand whether the nominee will get the money, it’s important to know the exact banking rules and legal process.
Who Is a Nominee?
A nominee is a temporary custodian appointed by the account holder.
The nominee’s job:
- Collect the account holder’s money after death
- Keep it safe
- Distribute it to the legal heirs Nominee ≠ Owner Nominee = Trustee (custodian)
Why Is Nominee Treated as a Trustee?
Because earlier many legal heirs complained:
Nominee kept all money
Legal heirs didn’t get their share
So, the law clarified:
Nominee will act only as a trustee
Ownership stays with legal heirs
Nominee must hand over the money to them
Where Do We Add Nominee?
Nomination is allowed in:
Savings Account
Current Account (including Proprietorship)
NPS
PPF
Fixed Deposit (FD)
Recurring Deposit (RD)
Demat Account
Life Insurance
Mutual Funds
If The Account Is Joint and Nomination Exists
If one holder dies, the other joint holder gets the money
Nominee has no right until all joint holders are dead
Can an Account Have Multiple Nominees?
Yes, multiple nominees are allowed.
Example:Ramesh adds 3 nominees:
Shyam – 30%
Rina – 40%
Rahul – 30%
These percentages must be decided by the account holder.
Even then: They must transfer shares to legal heirs.
Why Allocate Percentage if Nominee Is Not the Owner?
Percentage helps the bank know how to distribute temporarily among nominees.After receiving the share,they must hand it over to the legal heirs.
If There Are No Legal Heirs
Then the money will be distributed as per Hindu Succession Act:
- Class 1 Heirs
- If none → Class 2 Heirs
- If none → Agnates
- If none → Cognates
- If none → Government takes the money
What If No Nominee Is Present?
This is a bigger issue.
Legal family must submit:
Succession Certificate or
Pedhinama (Legal heir certificate)
Then decide who will be the “claimant”.Bank will transfer money to that claimant,and he/she must distribute among other heirs.
Can Nominee Be a Minor?
Yes.
If nominee is a minor:
A “natural guardian” must be added
Guardian receives the money
When child becomes major, amount is handed over
Can Nominee Be Changed?
Yes — anytime by the account holder.
In Case of First Holder’s Death (Joint Account)
The account must be closed or converted
Second holder becomes primary holder
Money Generated After Death?
Government benefits received after death (pension arrears, subsidies)are not payable and will be returned to government.
Conclusion
A nominee’s role is custodian, not owner.The final right always remains with the legal heirs.Understanding nomination avoids disputes and ensures smooth settlement.
In simple terms, the nominee receives the money first, but the final ownership always goes to the legal heirs as per succession law. The nominee only acts as a custodian or caretaker of funds. Therefore, customers must always update nominations and keep legal documents ready to avoid disputes. Understanding these rules helps families claim money easily and without delay.
Here as a banker myself i want to clarify your query of nominee and its related rules as now a days our family issues are growing and due to lack of knowledge we are unable to handle the situation of feels inferior when this type of situation is in front of us but with this article now you can also fight for your rights.