Remember to nominate a beneficiary for all your financial accounts, including bank accounts, Demat accounts, and insurance policies.
If the account holder passes away without a nominee, the rightful heirs must go through a legal process to claim the money.
When an account holder dies, the banking and insurance companies transfer the funds to the nominee.
However, many people overlook this vital step, assuming it’s unnecessary. Financial experts who have seen the consequences of such oversights strongly advise that specifying a nominee for each account is crucial to ensure that the money goes to the rightful heirs in case of the account holder’s death.
Every account holder is required to nominate a beneficiary, and in the event of the account holder’s death, the entire amount will be paid to the nominee.
If multiple nominees are chosen, the funds will be divided equally. It’s also important to note that if a nominee is not named, the money will be distributed among the legal heirs of the deceased account holder.
Without a nominee, banks may close the account and deposit the funds in the government treasury, potentially leading to a significant loss of funds.
This can also lead to potential disputes among the heirs and a lengthy process to establish legal ownership.
Therefore, nominating a beneficiary for each financial account is crucial to ensure a smooth transfer of funds to the rightful heirs.