To avoid any confusion, appoint the intended beneficiary as nominee
A few weeks ago, the Bombay High Court (Mr. Justice G.S. Patel, the Bombay High Court in Jayanand Jayant Salgaonkar vs. Jayashree Jayant Salgaonkar) overturned an earlier judgment that had declared that nominees, and not legal heirs, will get the ownership rights of share certificates. The ruling has once again thrown open the debate on the ownership of an investor’s assets once s/he dies. Who is the legitimate owner of the assets — the nominee or the legal heir/s?
In general, the nominee is deemed to be a trustee or a custodian under the law and must distribute the assets to the legal heirs named in a will, or according to the country's succession laws. This is true for all financial instruments, except shares and debentures. What’s also interesting is that the new Insurance Laws (Amendment) Act, 2015, makes nominees — restricted to immediate family members such as spouse, parents and children — the beneficiary so that the insurance money can go to the intended recipient.
In the case of stocks and debentures, the nominee is supposed to legally inherit the assets on the death of the shareholder. In the 2010 Harsha Nitin Kokate case, for example, the Bombay High Court had ruled that the nominee, and not the legal heir, would inherit the shares. In case of a joint holding, the surviving joint holder becomes the owner of the shares/debentures, and not the nominee. On the other hand, if a nominee has not been named or if the nominee has pre-deceased the original holder/s, then a beneficiary under the will of the last surviving joint holder is entitled to the shares.
Article referred: http://www.business-standard.com/article/pf/nominee-versus-legal-heir-115042900735_1.html
A few weeks ago, the Bombay High Court (Mr. Justice G.S. Patel, the Bombay High Court in Jayanand Jayant Salgaonkar vs. Jayashree Jayant Salgaonkar) overturned an earlier judgment that had declared that nominees, and not legal heirs, will get the ownership rights of share certificates. The ruling has once again thrown open the debate on the ownership of an investor’s assets once s/he dies. Who is the legitimate owner of the assets — the nominee or the legal heir/s?
In general, the nominee is deemed to be a trustee or a custodian under the law and must distribute the assets to the legal heirs named in a will, or according to the country's succession laws. This is true for all financial instruments, except shares and debentures. What’s also interesting is that the new Insurance Laws (Amendment) Act, 2015, makes nominees — restricted to immediate family members such as spouse, parents and children — the beneficiary so that the insurance money can go to the intended recipient.
In the case of stocks and debentures, the nominee is supposed to legally inherit the assets on the death of the shareholder. In the 2010 Harsha Nitin Kokate case, for example, the Bombay High Court had ruled that the nominee, and not the legal heir, would inherit the shares. In case of a joint holding, the surviving joint holder becomes the owner of the shares/debentures, and not the nominee. On the other hand, if a nominee has not been named or if the nominee has pre-deceased the original holder/s, then a beneficiary under the will of the last surviving joint holder is entitled to the shares.
Article referred: http://www.business-standard.com/article/pf/nominee-versus-legal-heir-115042900735_1.html
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