| Ramesh Iyer thought the nominations he had put on every account would take care of his family. What his widow Lakshmi discovered in the weeks after his death is the same thing most Indian families learn too late — a nominee is not the same as a legal heir. |
By Dinesh Kumar S · Published December 05, 2026 · Updated April 14, 2026 · 18 min read
Every three or four weeks, I get an email or a Reddit message from someone whose father or mother has just died, asking me what looks like a very simple question. “My father put my name as nominee on his savings account. My brother is now saying he also has a right. Who is correct?” The question sounds simple because the people asking it have grown up believing that a nominee is a kind of automatic heir. That belief is one of the most expensive misunderstandings in Indian personal finance, and it is not the reader’s fault. Every uncle, every bank relationship manager, every LIC agent has been telling them something slightly different for forty years, and the truth is genuinely buried under four decades of Supreme Court rulings that most Indian families never read.
Let me tell you the story of a family that is composite rather than real, built from the pattern of cases I have seen again and again among readers, neighbours and extended family in Tamil Nadu. Ramesh Iyer, a retired bank manager from Chennai, died of a cardiac arrest on a quiet Tuesday morning in early 2026 at the age of 58. His widow Lakshmi discovered over the following weeks that her husband had been meticulous about nominations — the kind of man who updated the paperwork every time a form was revised. The savings account nominated his younger brother Venkat. The fixed deposits had Lakshmi herself as nominee. The mutual fund folio named their son Arun. The term insurance policy named Lakshmi. The PPF was in favour of their daughter Kavitha. Ramesh had even updated the demat account nomination a year before his death.
When Lakshmi sat down with a family lawyer three weeks later to begin the paperwork, she learned something that most Indian families only discover after a crisis. A nominee in India is not the same as a legal heir. On most financial assets, the nominee is only a custodian — someone legally authorised to receive the money and hold it in trust for whoever actually inherits under the law of succession. Venkat, named as nominee on the savings account, would collect the balance. But he would hold it as a trustee for Lakshmi, Arun, Kavitha and Ramesh’s 87-year-old mother — the four Class-I heirs under the Hindu Succession Act. Arun, named on the mutual fund folio, would receive the units the same way. This was not what Ramesh had intended when he filled out those forms. It was simply what the law said the forms meant.
This guide walks through exactly what Lakshmi’s family had to learn — the difference between nomination and inheritance across bank accounts, mutual funds, demat accounts, insurance, PPF, EPF, and NPS. It explains the forty-year-old Supreme Court doctrine that governs the answer, the major reforms of 2025 that changed the operational rules without disturbing the doctrine, and the single category — life insurance under Section 39(7) of the Insurance Act — where a nominee can actually own the money. I have used the Iyer family as a narrative device because abstract legal principles are hard to remember, but specific people at a dining table are not. Every rule cited here is drawn from the actual statute, the Supreme Court judgment, or the relevant RBI, SEBI, IRDAI or PFRDA circular. At the end, I will give you my own opinion on what every Indian family should actually do — which is a conversation Ramesh never got around to having with Lakshmi.
In This Article
▸ The One Legal Principle Behind Every Answer
▸ Bank Accounts — What Venkat Actually Gets
▸ The November 2025 Banking Reform and Joint Accounts
▸ Mutual Funds — Arun’s Folio and SEBI’s 2025 Revamp
▸ Shares and Demat — The Shakti Yezdani Ruling
▸ Life Insurance — The One Real Exception
▸ The MWPA Policy — A Statutory Trust for the Family
▸ PPF, EPF, and NPS — Three Different Rulebooks
▸ What Happens When There Is No Nominee At All
▸ Why a Will Matters More Than Every Nomination Combined
▸ Five Misconceptions That Cost Indian Families Real Money
▸ Frequently Asked Questions
The One Legal Principle Behind Every Answer
The Supreme Court of India has answered the same question in four different cases across four decades, and the answer has not changed. A nominee is the hand that the bank, insurer, or fund house is legally authorised to pay. The nominee’s role is to give the institution a “valid discharge” — a formal release from further liability. Nothing more. Who actually owns the money is decided separately, under the law of succession that applies to the deceased’s religion and family.
The foundational case is Smt. Sarbati Devi vs Smt. Usha Devi (1984) 1 SCC 424. Two women claimed a life insurance payout — one was the policyholder’s nominee, the other his widow. The Supreme Court held that Section 39 of the Insurance Act, 1938 only tells the insurer whom to pay. It does not decide inheritance. The money became part of the deceased’s estate and was distributed to his legal heirs. The nominee, the Court said in a line I find myself quoting in reader emails almost every month, is “merely the hand authorised to receive the amount”.
This principle was extended to National Savings Certificates in Khanchandani (2000), to bank deposits in Ram Chander Talwar vs Devender Kumar Talwar (2010) 10 SCC 671 where the Court held plainly that a bank nominee does not become the owner “by any stretch of imagination”, and to PPF and provident fund accounts in Shipra Sengupta (2009). The most recent ruling — and the one that cleared up a long-running confusion around shares and mutual funds — is Shakti Yezdani vs Jayanand Jayant Salgaonkar, 2023 INSC 1076, decided on 14 December 2023. The Court held that nomination under the Companies Act does not create “a third mode of succession” alongside testamentary and intestate succession. It is a convenience mechanism. Beneficial ownership still flows through a will or through succession law.
Every rule in the rest of this guide traces back to that single principle, which is why the same basic answer applies across bank accounts, mutual funds, shares, PPF, EPF, and NPS — with the narrow insurance exception we will discuss in its own section. I want to flag one thing before we go further. If you ask ten practising bankers in Tamil Nadu, Karnataka, or Maharashtra what a nominee is, at least six of them will tell you the nominee becomes the owner. They believe this genuinely, not dishonestly, because that is how it has been explained to them in their own branches. This is the single clearest example I can give you of how legal truth and industry folklore can diverge in India, and why a careful reader of this article will know more about succession law than many of the people sitting across the counter at a bank.
Bank Accounts — What Venkat Actually Gets
Bank nomination is governed by Sections 45ZA to 45ZF of the Banking Regulation Act, 1949, supported by the Banking Companies (Nomination) Rules, 1985. Section 45ZA(3) gives the bank a full discharge on paying the nominee — but it explicitly preserves “the right or claim which any person may have against the person to whom the payment is made”. The RBI Master Circular on Maintenance of Deposit Accounts states this even more directly, saying the nominee receives the money “as trustee for the legal heirs”.
Translate this back to Ramesh Iyer’s savings account. Ramesh nominated his brother Venkat. After producing a death certificate and a completed claim form, Venkat will receive the balance from the bank. The bank is fully discharged once it has paid him. But Ramesh’s Class-I heirs under the Hindu Succession Act — his widow Lakshmi, his son Arun, his daughter Kavitha, and his mother — are the actual owners of that money, in equal shares under Section 10 of the Act. Venkat, who is a Class-II heir, is excluded from beneficial ownership because Class-I heirs are alive. He must hand the balance over to the four rightful heirs. If he refuses, the heirs can sue him in a civil court, and they will almost certainly succeed.
I have seen this exact fact pattern play out three times among families I know personally in Chennai and once in my own extended network in Tiruchirappalli. In two of those four cases, the nominee — a brother, in both — quietly transferred the money to the widow and children after some pressure from elders in the family. In the third case, the brother kept the money, claiming his late brother had “given” it to him by nomination, and the matter went to the district civil court where a decree was eventually passed against him, eighteen months and roughly a lakh of legal fees later. The lesson is painful but simple. The nomination only tells the bank whom to pay. It does not decide who keeps the money. Families who assume otherwise can end up in years of civil litigation over amounts that are often less than the legal fees they spend fighting. This is also why banks often ask for an indemnity or a no-objection from the legal heirs before releasing large balances — they are trying to avoid being sued by excluded heirs even after paying the nominee in good faith.
Bank lockers follow the same principle under Section 45ZE, with the additional operational framework of the RBI Master Direction on Safe Deposit Lockers issued on 18 August 2021. The nominee can access the contents for inventory, but any valuables remain the property of the estate and pass under succession law.
The November 2025 Banking Reform and Joint Accounts
A significant operational change took effect on 1 November 2025. The Banking Laws (Amendment) Act, 2025 amended the 1949 Act to permit up to four nominees per bank deposit account — either successively or simultaneously. If you choose simultaneous nomination, you must specify percentage shares that total 100 percent. If you choose successive nomination, the second nominee’s right arises only on the first nominee’s death. For bank lockers and safe custody articles, only successive nomination is permitted — not simultaneous. A new provision was inserted to set out the priority sequence.
This reform was long overdue. Before November 2025, Indian depositors could only name one nominee per account, which created awkward workarounds for people trying to provide for multiple family members. The new rule lets a couple name both their children with equal 50 percent shares, or name a spouse as primary and a child as backup, without the earlier need to maintain multiple accounts. But I want you to hear this clearly — the reform changes operational flexibility, not the underlying doctrine. All four nominees — or however many are named — still receive as trustees for the legal heirs, unless they happen to be the legal heirs themselves. I have already seen Indian personal finance accounts on X and Instagram claiming that the November 2025 amendment “finally lets you pass money directly to nominees”. This is wrong. If you read the amendment carefully, it simply raises the number of custodians from one to four. The custodian-versus-heir split remains intact.
Joint accounts follow different mechanics. The RBI’s circular dated 9 June 2005 recognises three operating modes. Under “Either or Survivor” or “Anyone or Survivors”, any holder can transact during lifetime, and on one holder’s death the survivor continues to operate the account. Under “Former or Survivor”, only the first-named holder can transact while alive. In all cases, the nominee’s right arises only after the death of every joint holder. The critical nuance — and this one catches families most often — is that when a joint holder dies and the survivor continues operating the account, that surviving holder still holds the deceased’s share as a trustee for the deceased’s legal heirs. The survivor does not automatically become the owner of the deceased’s money simply by virtue of being the survivor. This is where I see the most confusion in reader emails, especially when the “Either or Survivor” account was opened primarily for convenience rather than as a considered inheritance plan. Many Tamil and Kerala families open joint accounts casually, thinking it simplifies things, and only discover during probate that the ownership question was never actually settled.
The RBI also issued the Settlement of Claims in respect of Deceased Customers of Banks Directions, 2025. These mandate a 15-day window for claim settlement and simplify the process for small balances — up to ₹15 lakh at commercial banks and ₹5 lakh at co-operative banks can be released to legal heirs against an indemnity and disclaimer, without requiring a succession certificate. This is a genuinely useful reform for middle-class Indian families where most bank balances fall well within these thresholds.
Mutual Funds — Arun’s Folio and SEBI’s 2025 Revamp
Ramesh’s mutual fund folio named his son Arun as nominee. What Arun receives — and whether he owns it — is governed by Regulation 29A of the SEBI (Mutual Funds) Regulations, 1996, as reshaped by SEBI’s January 2025 circular titled Revise and Revamp Nomination Facilities in the Indian Securities Market.
That January 2025 circular is, in my opinion, the most consequential SEBI instrument of 2025 for retail investors, and it has received almost none of the press coverage it deserved. It is the first SEBI instrument to expressly codify the custodian principle from Shakti Yezdani. Its text states that the nominee receives the assets “as trustee on behalf of legal heir(s) of the deceased holder(s)”, and it requires the nominee to sign a formal declaration to that effect at the time of transmission. The circular raises the maximum number of nominees per folio or demat account to ten, allows percentage allocation, requires a personal identifier for each nominee (PAN, driving licence number, or the last four digits of Aadhaar), and specifically prohibits AMCs and depositories from demanding indemnities, affidavits, or notarised documents for transmission to a named nominee. That last point is worth emphasising — before this circular, several AMCs and depository participants were effectively making transmission impossible for middle-class families by demanding documents that cost twenty to thirty thousand rupees to procure. That friction is now gone by regulatory fiat.
For Ramesh’s folio, the mechanics are straightforward. Arun will submit the death certificate, the transmission request form, his KYC details, and a self-declaration that he receives the units in trust for the legal heirs. The AMC will transfer the units to his folio. The units then legally belong to the four Class-I heirs — Lakshmi, Arun, Kavitha, and Ramesh’s mother — in equal proportion. Arun is free to redeem the units and distribute the cash, or transfer fractional holdings to each heir. If the family is on cordial terms, which they generally are in Ramesh’s household, this can be settled in a single family meeting over a Sunday afternoon. If there were a dispute, any excluded heir could seek a civil declaration and an order for partition.
A second important SEBI circular came out in September 2025, addressing a subtle but expensive issue. When a nominee later passes units to the legal heirs, the capital gains tax code could have wrongly treated that transfer as a taxable event. The circular mandates a dedicated reporting code called TLH for nominee-to-legal-heir transmissions, confirming that the transfer is not a “transfer” under Section 47(iii) of the Income-tax Act. Depositories, registrars, and AMCs had to implement this by 1 January 2026. For Arun, this means he can move units to Lakshmi, Kavitha, or his grandmother without crystallising a tax event. For more on how mutual fund investing itself works across market cycles, our guide on how SIP works when the market falls explains the underlying compounding mechanics.
| Four Supreme Court rulings across four decades have said the same thing in different ways. The nominee is the messenger. The legal heir is the recipient. |
Shares and Demat — The Shakti Yezdani Ruling
For many years there was genuine legal confusion over whether a demat nominee became the absolute owner of the shares. Section 72 of the Companies Act, 2013 uses apparently strong language — it says shares “shall vest” in the nominee “to the exclusion of all other persons” notwithstanding anything in any other law. In 2010 the Bombay High Court in Kokate read this literally and held that a demat nominee did become the owner, overriding the will. For thirteen years, demat accounts sat in an awkward zone different from bank accounts and mutual funds, and every estate-planning seminar in Indian metros had to include a footnote about this exception.
The Supreme Court ended this confusion in Shakti Yezdani vs Jayanand Jayant Salgaonkar, decided on 14 December 2023 by a bench of Justices Hrishikesh Roy and Pankaj Mithal. The Court squarely overruled Kokate and held that the word “vest” in Section 72 serves the “singular purpose of allowing the company to vest the shares upon the nominee to the exclusion of any other person to discharge its liability”. This vesting is “temporary, until the legal heirs have settled the affairs”. Companies law does not create a third mode of succession alongside testamentary and intestate succession.
For Ramesh’s demat account, this means the nominee he had named will receive the shares at transmission — but holds them in trust for the legal heirs, exactly like bank deposits and mutual funds. If Ramesh had left a will disposing of his portfolio differently from the demat nomination, the will would prevail. The only genuine exception in securities is the treatment of joint demat accounts on the death of one holder, where the surviving joint holder does take “as owner” by the rule of survivorship. This is a quirk of how depositories treat joint-name accounts, not a dilution of the custodian doctrine. For any Indian investor sitting on shares or ETFs of real value, I strongly recommend you write a will that specifically disposes of the demat portfolio, because otherwise you leave the inheritance of your most volatile asset class to the blunt rules of intestate succession — which often produces outcomes nobody in the family actually wants.
Life Insurance — The One Real Exception
Life insurance is the single significant exception to the nominee-as-custodian rule in Indian law. The Insurance Laws (Amendment) Act, 2015, which took effect on 26 December 2014, inserted Section 39(7) into the Insurance Act, 1938 and created a new concept — the beneficial nominee.
Section 39(7) reads that where the policyholder nominates his parents, spouse, children, or any combination of them, those nominees are “beneficially entitled to the amount payable by the insurer”. The section uses a crucial phrase: the payout “shall not form part of the estate of the deceased”, and no other person shall have any right to it. Section 39(8) adds a protective layer — if a beneficial nominee dies after the policyholder but before receiving the money, the share goes to that nominee’s own legal heirs, not back into the deceased’s estate. Section 39(10) extends these rules to all policies where proceeds become payable after 26 December 2014.
For Ramesh’s term insurance policy, where he named Lakshmi, this produces a decisive result. Lakshmi is his spouse — she falls squarely within the Section 39(7) enumerated relationships. She is therefore a beneficial nominee. The insurance proceeds come to her in her own right, not in trust for the broader set of legal heirs. Arun, Kavitha, and Ramesh’s mother have no claim to the term insurance payout. This is a powerful protection, and it is the primary reason I tell every married reader to own their term cover in their own name and nominate their spouse under it — rather than leaving the household uninsured or naming a parent and assuming the payout will eventually reach the spouse.
Three important caveats apply, and this is where I want to spend a little extra time because the commentary online gets it wrong more often than not. First, the beneficial nominee status is available only to spouse, parents, and children. If Ramesh had nominated Venkat — his brother — under the term insurance, Venkat would remain an ordinary custodian nominee under the old Sarbati Devi rule, receiving the money for the legal heirs. Friends, cousins, nephews, and in-laws do not qualify for beneficial status, no matter how close the relationship is in practice. Second, the Supreme Court has not directly ruled on Section 39(7), and the High Courts are split. The Andhra Pradesh High Court in Mallela Manimala (2023) gave full beneficial rights to a Section 39(7) nominee against other heirs. But decisions in some recent High Court cases from Karnataka and Allahabad have taken the opposite view, holding that Section 39(7) does not completely extinguish Class-I heirs’ rights under the Hindu Succession Act. The final Supreme Court clarification is still awaited. My own reading of the statute aligns with the Andhra Pradesh position — the text of Section 39(7) is unusually clear about the payout not forming part of the deceased’s estate — but until the Supreme Court settles the split, a cautious family with significant term cover should consider the MWPA route I describe in the next section, which sidesteps the dispute entirely. Third, health insurance is not covered by Section 39 at all, because that section is part of the life insurance chapter of the Act. Health and personal accident covers require nominations for operational purposes, but the underlying payout — where one exists — is subject to succession law.
The MWPA Policy — A Statutory Trust for the Family
I want to make a strong claim in this section, because I think the evidence genuinely supports it. The Married Women’s Property Act, 1874 is the most underused estate-planning tool available to Indian families. Every month I see commentary on Indian finance platforms debating whether to buy term insurance from LIC or HDFC Life, whether a return-of-premium rider is worth it, whether a 1 crore cover is enough for a middle-class earner. Almost nobody discusses whether the policy should be written under Section 6 of the MWPA. That silence is a scandal of its own, because for any married man with a wife and children to protect, MWPA is a genuinely powerful instrument.
Section 6 says that when a married man takes out a life policy and expresses it on the face of the policy to be for the benefit of his wife, or his wife and children, the policy is deemed to be a trust. The proceeds never become part of his estate. They are immune from his creditors. His will cannot redirect them. Once the policy is signed as an MWPA policy, he cannot even surrender or assign it without the consent of the named beneficiaries. The 1959 extension to the MWPA brought Hindus, Muslims, Sikhs, Jains, and Buddhists within the section’s reach, so it is available to virtually every Indian.
Had Ramesh taken his term insurance as an MWPA policy in Lakshmi’s favour, the question of succession would not even have arisen. The payout would go to Lakshmi as trustee under the Act, and it would have been protected against any creditor claim on Ramesh’s estate — a consideration that matters especially for self-employed professionals, business owners, small-business proprietors in Tamil Nadu’s dense SME ecosystem, or anyone with significant loans. For the narrow but real category of families where creditor protection or family-dispute protection is a live concern, MWPA is the strongest tool Indian law offers. Many insurers, including LIC, HDFC Life, Max Life, and Tata AIA, provide a one-page MWPA addendum that can be attached at the time of purchase at no extra cost. If you are buying term insurance right now and you are married, I would urge you to ask your insurer for the MWPA form as part of the application itself. Adding it later is possible but operationally messier.
PPF, EPF, and NPS — Three Different Rulebooks
Ramesh’s PPF named his daughter Kavitha. His EPF account — built up over a 32-year career — named Lakshmi. His NPS Tier-I account, opened late in his career, named Lakshmi as primary and Arun as secondary in an 80:20 split. Three different retirement instruments, three different rulebooks, one common consequence when the rules are not understood.
PPF nomination is governed by Rule 14 of the Government Savings Promotion General Rules, 2018. Curiously, PPF has permitted up to four nominees since 2018 — long before banking caught up with the November 2025 reform. An interesting quirk is that the PPF rules allow the depositor to specify whether the nominee receives as a beneficiary with absolute ownership, or as a trustee for the legal heirs — a drafting option not available in banking or mutual fund nominations. If Ramesh had elected the absolute-ownership option, Kavitha would take the PPF balance as owner. If he did not specify, the default is custodian treatment, and she holds for the legal heirs. The Supreme Court in Shipra Sengupta applied the custodian rule to PPF even before the 2018 Rules were issued, so the safe assumption is custodian unless the declaration is explicit. An April 2025 amendment has also removed the ₹50 fee earlier charged for changing nominations on PPF, SCSS and NSC accounts.
EPF operates under Paragraphs 61 and 70 of the Employees’ Provident Funds Scheme, 1952, read with Section 10(2) of the EPF and Miscellaneous Provisions Act, 1952. EPF has a unique rule that catches many people off guard, and I will admit I did not know this myself until a reader wrote in asking about it two years ago. Paragraph 61 says that if the member has a “family” as defined in Paragraph 2(g) — spouse, children, dependent parents — any nomination outside the family is invalid. And, critically, marriage automatically cancels any pre-marriage nomination. Every EPF member who marries must submit a fresh nomination through the Unified Member Portal, or else on death the corpus is distributed under Paragraph 70 to family members in equal shares. This is a rule I actively remind every newly married reader about, because I estimate roughly eighty percent of married EPF members have not updated their nomination. Section 10(2) also gives EPF proceeds immunity from the member’s debts — a protective feature that most retirement-savers do not know about.
NPS nomination is governed by Regulation 32 of the PFRDA (Exits and Withdrawals) Regulations, 2015, as amended in 2025. Subscribers can name up to three nominees with specified percentage shares, separately for Tier-I and Tier-II. Marriage mandates a fresh nomination. A significant 2025 amendment raised the entry and exit ages and now allows 100 percent of the accumulated pension corpus to be paid to the nominee or legal heirs without compulsory annuity purchase in certain cases — a genuinely useful reform for families who prefer a lump sum to a lifetime annuity. For Ramesh’s family, this means Lakshmi will receive 80 percent and Arun 20 percent of the NPS corpus at transmission, with greater flexibility than existed under the earlier regime.
What Happens When There Is No Nominee At All
Nominations make life easier, but they are not always in place — especially for accounts opened decades ago, inherited property, or assets that a person accumulated without thinking about transmission. When no nominee exists, the legal heirs must go through a more formal process.
For movable financial assets like shares, fixed deposits above the simplified-settlement threshold, and mutual fund units, heirs typically need a succession certificate under Part X of the Indian Succession Act, 1925. The application goes to the District Judge with territorial jurisdiction over the deceased’s residence. Court fees are ad valorem — usually 2 to 3 percent of the value of the securities claimed, with caps in states like Maharashtra and Karnataka holding the fee at roughly ₹75,000 regardless of the asset value. An uncontested matter typically takes three to six months; a contested one can take years. In Tamil Nadu specifically, the Principal District Court in Chennai handles a large volume of these applications, and the wait time has improved significantly since the High Court’s case-management directions a few years ago.
A legal heirship certificate is a simpler administrative document issued by a Tahsildar or Sub-Divisional Magistrate. It only identifies surviving family members and is useful for pensions, utility transfers, and compassionate appointments. It is not a substitute for a succession certificate when claiming debts or securities from a bank or AMC. States run these applications through dedicated online portals — Tamil Nadu’s e-Sevai portal, which I have had readers from Coimbatore and Madurai use successfully, plus Maharashtra’s Aaple Sarkar, Karnataka’s Nadakacheri, and Delhi’s e-District are the most widely used. Processing times vary from two weeks in well-digitised states to several months in backlog-heavy districts.
Where a will exists, a further document called probate may be required. Under Sections 213 and 57 of the Indian Succession Act, probate is compulsory only for Hindu, Sikh, Jain, and Buddhist wills made in, or concerning immovable property within, the original civil jurisdiction of the Bombay, Calcutta, and Madras High Courts. Elsewhere in India, probate is optional, though banks and AMCs often request it as a comfort document. Tamil Nadu readers should pay attention to this because Chennai falls within the Madras High Court’s original civil jurisdiction — which means probate is genuinely compulsory for Hindu wills concerning Chennai properties, not merely a bureaucratic convenience.
| Seven asset types. Seven different rulebooks. Only two categories — Section 39(7) insurance to close family, and MWPA policies — where the nominee actually owns the money. |
Why a Will Matters More Than Every Nomination Combined
The single most important lesson from Ramesh’s story — and from the body of Indian law behind it — is that a will, not a nomination, is what decides who actually owns your money after you die. Under Shakti Yezdani, a will overrides the nominee for shares and mutual funds. Under Sarbati Devi and Ram Chander Talwar, it overrides the nominee for life insurance (outside Section 39(7)) and bank accounts. For testamentary assets, nomination is only an administrative shortcut that tells the institution whom to pay. Ownership flows through the will.
A valid will in India, under the Indian Succession Act, 1925, requires three things — the maker must be of sound mind, must sign or affix his thumb impression at the foot or end of the document, and the signature must be attested by two witnesses. Registration is optional but strongly recommended because it creates a statutory presumption of authenticity. Registration fees are minimal — typically ₹100 to ₹500 depending on state — and the sub-registrar retains a copy permanently. A registered will is materially harder for aggrieved family members to challenge. For any Indian household with financial assets above ₹10 lakh or real estate holdings, a registered will is not optional paperwork; it is the foundation of orderly transmission.
For Ramesh’s family, the absence of a will means the Hindu Succession Act will decide the outcome for every non-insurance asset. The Class-I heirs — Lakshmi, Arun, Kavitha, and his mother — will split everything equally. That outcome happens to be a reasonable one for the Iyer family. But if Ramesh had wanted to leave a larger share to his elderly mother who had no independent income, or to set aside a specific sum for Kavitha’s daughter’s education, the absence of a will closes off those options. The nominations alone cannot direct the money to the people he would have chosen.
I want to be honest about something that is not usually discussed openly in Indian families. In traditional South Indian households — Tamil, Kerala, Andhra, Karnataka — writing a will is often seen as slightly morbid, as though the act itself invites misfortune. I have had uncles in my own extended network refuse to even discuss estate planning because the topic feels inauspicious to bring up at a family gathering. This cultural reluctance is understandable, but it has a real financial cost that hits the wrong people — usually widows and unmarried daughters, who are the most vulnerable members of the family and the least equipped to navigate civil courts. If you have been putting off writing your own will because it feels premature or unlucky, please consider it not as a statement about your own mortality, but as an act of consideration for the people who will have to sort out your affairs after you are gone. It is, in my view, the single clearest financial expression of love that an Indian head of household can leave behind.
| Four steps that take a weekend to complete and save your family months of legal work. Nomination alone is only the first step. |
Five Misconceptions That Cost Indian Families Real Money
First, the nominee automatically becomes the legal heir. Except for life insurance nominations in favour of spouse, parents, or children under Section 39(7), and for MWPA policies, nomination does not confer ownership. The nominee collects the money and hands it over to the heirs. I have made this point three times already in this article because it is the single most common misunderstanding I see, and because families who get this wrong end up in avoidable civil disputes.
Second, insurance nomination works the same way as bank nomination. The two diverged sharply after the 2015 amendment. A spouse, parent, or child nominated under a life insurance policy is a beneficial nominee with ownership rights. A spouse, parent, or child nominated under a bank account is still only a custodian. This divergence is counterintuitive, but it is what the statute says and what the Supreme Court has upheld.
Third, having nominations everywhere removes the need for a will. This is the most expensive misconception in Indian financial planning, and I see it constantly on Reddit and Quora threads where users argue that nominations are “enough”. A will overrides every nomination for most asset classes. Without a will, the rigid rules of the Hindu Succession Act or other personal law apply, and the deceased loses all ability to direct where specific assets should go.
Fourth, a joint account automatically passes to the surviving holder. The survivor continues to operate the account and receives the balance, but holds the deceased’s share in trust for the deceased’s legal heirs. This is the RBI’s own official position, stated plainly in the Master Circular on Maintenance of Deposit Accounts. Families who treat joint accounts as automatic inheritance vehicles often discover the truth only after a sibling files a civil suit.
Fifth, the November 2025 banking reform allowing four nominees changes the inheritance rules. It does not. The reform expands operational flexibility — you can now name four people instead of one — but all four nominees continue to hold as trustees for the legal heirs unless they happen to be the legal heirs themselves. The underlying Sarbati Devi-Shakti Yezdani doctrine remains intact. Please do not believe the X threads that claim otherwise.
Frequently Asked Questions
My father named me as sole nominee on his bank account before his death. My siblings are now asking for their share. Are they entitled?
Yes, if your father did not leave a will. The bank will pay the balance to you because you are the nominee, but under the Hindu Succession Act you hold that money as trustee for the legal heirs — which includes your siblings. You are legally required to share it equally among the Class-I heirs. Refusing would expose you to a civil suit that your siblings are very likely to win, and you would also lose the relationship with them, which usually costs more in the long run than the money itself.
My mother-in-law nominated me in her insurance policy. She is still alive. Can she change the nomination?
Yes. Nominations under ordinary life insurance policies are revocable at any time during the policyholder’s lifetime. The exception is an MWPA policy, where the beneficiaries’ consent is required for any change. For standard policies, your mother-in-law can freely update the nomination through a written request to the insurer.
I am nominated in my wife’s bank account. She has a will leaving everything to our children. Who gets the money?
The children, through you. You will receive the balance from the bank as the nominee, but because your wife’s will directs the money to the children, you hold it in trust for them. This is a clear application of the Shakti Yezdani principle. If you kept the money for yourself, the children could sue for recovery once they reach majority.
I am a Hindu male with a pre-marriage EPF nomination naming my mother. I just got married. Is the nomination still valid?
No. Under Paragraph 61 of the EPF Scheme, 1952, marriage automatically invalidates any pre-marriage nomination. You must submit a fresh e-nomination through the EPFO Unified Member Portal. Until you do, if something were to happen, your EPF corpus would be distributed under Paragraph 70 to your defined “family” — typically your wife, children, and dependent parents in equal shares. Go do this today if you have not already — it takes under ten minutes on the portal.
Do I need probate in Tamil Nadu for my father’s will?
Yes, if he was Hindu, Sikh, Jain, or Buddhist and the will was made in or concerns immovable property within the original civil jurisdiction of the Madras High Court, which covers Chennai. Outside that territorial scope within Tamil Nadu, probate is not strictly compulsory under Section 213 of the Indian Succession Act. However, many banks and AMCs in Tamil Nadu still request a probated will for large claims as a comfort document, even when the statute does not require it.
The Real Takeaway
Nomination is not inheritance. A nominee is the hand that an institution is authorised to pay. Inheritance is decided by a will if one exists, and by the Hindu Succession Act, the Indian Succession Act, or Muslim personal law if one does not. The only meaningful exception is a life insurance policy nominated in favour of a spouse, parent, or child — and even that exception is narrower than most people believe, with the Supreme Court yet to settle the split between the High Courts.
The practical implications for any Indian family are three. Nominate every financial account, because it dramatically shortens the transmission timeline and reduces the cost of claim settlement. Write a registered will, because nomination alone cannot direct specific assets to specific people. And for families with significant term insurance and a real concern about creditor protection or family disputes, seriously evaluate the MWPA route — it remains the single strongest estate-planning structure Indian law recognises. Ramesh Iyer did two out of three. His family will spend the next several months settling his estate because the third — a will — was never written.
I want to close with an observation that has stayed with me across every reader conversation and every family situation I have watched unfold. In my grandparents’ generation, joint families handled transmission informally. Property passed from the father to the eldest son, who looked after the rest. It worked, imperfectly, because the family lived together and decisions were made under one roof. Our generation no longer lives that way. We are scattered across Chennai, Bengaluru, the Gulf, and North America. Our assets sit in digital folios, demat accounts, and EPF portals that our parents cannot always access. Our children may not speak the language of the land records office. The informal rules that once held extended families together do not reach us any more. What has replaced them is paperwork — nominations, wills, MWPA declarations, probate applications. The paperwork is not romantic. But it is, in our generation, the only way love crosses the boundary between life and death without getting stuck in a civil court for three years. Do not leave your family to discover this lesson the same way Lakshmi is discovering it. Spend the weekend on it this month.
Sources and References
▸ Smt. Sarbati Devi vs Smt. Usha Devi (1984) 1 SCC 424 — the foundational custodian doctrine
▸ Ram Chander Talwar vs Devender Kumar Talwar (2010) 10 SCC 671 — bank nominee
▸ Shakti Yezdani vs Jayanand Jayant Salgaonkar, 2023 INSC 1076 — shares and mutual funds
▸ Banking Regulation Act, 1949 — Sections 45ZA to 45ZG, and Banking Companies (Nomination) Rules, 1985
▸ Banking Laws (Amendment) Act, 2025 — effective 1 November 2025
▸ RBI Settlement of Claims in respect of Deceased Customers of Banks Directions, 2025
▸ SEBI circular dated 10 January 2025 — Revise and Revamp Nomination Facilities in the Indian Securities Market
▸ SEBI circular dated 19 September 2025 — TLH transmission reporting code
▸ Insurance Act, 1938 — Section 39 as amended by Insurance Laws (Amendment) Act, 2015
▸ Married Women’s Property Act, 1874 — Section 6
▸ Hindu Succession Act, 1956 — Sections 8, 10, 30 and Schedule I
▸ Indian Succession Act, 1925 — Sections 213, 57, and Part X on succession certificates
▸ Companies Act, 2013 — Section 72 and Companies (Share Capital and Debentures) Rules, 2014
▸ EPF Scheme 1952 — Paragraphs 61 and 70; PFRDA (Exits and Withdrawals) Regulations 2015 as amended 2025
▸ Government Savings Promotion General Rules, 2018 — Rule 14 for PPF nominations
Disclaimer: This article is for educational purposes only and does not constitute legal advice. The names “Ramesh”, “Lakshmi”, “Arun”, “Kavitha”, and “Venkat” are used purely as illustrative examples; no real individuals are depicted. Succession law in India depends heavily on the deceased’s religion, state of residence, family composition, and the specific wording of any will. Recent judgments on Section 39(7) of the Insurance Act remain subject to further judicial clarification by the Supreme Court. Finance Guided is not a law firm, tax advisor, or SEBI-registered investment advisor. We do not earn any commission or referral fee from any bank, insurer, AMC, or law firm mentioned. Always consult a qualified lawyer or Chartered Accountant in India for your specific situation, particularly for will drafting, succession certificates, and large-value transmissions.
Dinesh Kumar S
Founder & Author — Finance Guided
B.Sc. Mathematics | M.Sc. Information Technology | Chennai, Tamil Nadu
Dinesh started Finance Guided because most insurance and tax content in India is written for professionals — not for the families who actually have to make the decisions. He writes research-based guides on term insurance, health insurance, income tax and personal finance, verified against IRDAI, SEBI, RBI and Income Tax Department sources. No product sales. No commissions. No paid placements.