By Karun Reji, Chartered Accountant (India), BI-Outsource, Kochi. This guide is general information, not legal advice.
Short answer: a nominee is the person who collects the money. A legal heir is the person who owns it under succession law or a will. In most cases the nominee holds the money for the legal heirs. The Supreme Court has said this repeatedly, including for shares in Shakti Yezdani v Jayanand Salgaonkar (2023).
How it works by asset
| Asset | Nominee's role |
|---|---|
| Bank accounts and FDs | Bank pays the nominee, who holds it for the legal heirs |
| Shares and mutual funds | Transferred to the nominee, but legal heirs can claim ownership |
| Life insurance | A spouse, parent or child named as nominee can be a "beneficial nominee" who keeps the money (Insurance Act, section 39) |
| Provident fund | Paid to the nominee under the scheme rules |
Common mistakes
- Naming one child as nominee everywhere, expecting the others to "sort it out"
- Nominations that contradict the will
- No nominee at all, forcing heirs to get a legal heir or succession certificate
- Old nominees still listed after a marriage, divorce or death
The fix
- Make a will that says who owns each asset.
- Match nominations to the will across every account.
- Keep one asset register the family can find.
See your own family's shares in 3 minutes: try our free succession planner, or talk to BI Family Office about a will, trust and succession plan.
Frequently asked questions
Usually not. For bank accounts, shares and mutual funds the nominee collects the money but holds it for the legal heirs. Life insurance is the main exception: a spouse, parent or child named as a beneficial nominee keeps the money.
The will generally decides ownership. The nominee collects the asset but must pass it to the heir named in the will.
