When does your MF, bank account or EPF nominee become outdated? Here’s why you should periodically review it

When you invest in a mutual fund, buy an insurance policy, open a bank account, or even get an EPF membership after joining the workforce, picking a nominee is one of the first things you are asked to do. It allows these institutions to know whom to contact if the account holder dies.

Naming a nominee may seem like a one-time formality, but life is bound to change over the years after you make that choice. That is why it is important to periodically review your nominee details to ensure they reflect your current wishes and help reduce complications for your family while making claims.

Major life events that call for a nominee update

Certain major life events can change who you want to nominate for your financial assets or even make it invalid. Here are some cases after which you may want to revisit your previous choice and make changes accordingly:

• Birth or adoption of a child: The arrival of a child in your life can change your financial priorities. Though a nominee does not become the owner of the assets after the original holder’s death, sometimes the legal beneficiary and nominee can be the same person.
• Death of the nominee: Failing to update your nomination after your nominee passes away can create unnecessary delays and paperwork for your legal heirs. If an investor passes away before appointing a new nominee, the financial institution will no longer have a valid nominee on record to transfer the assets to, making the transmission process paperwork-heavy and cumbersome for your family depending on the type of investment.

How is nominee different from a will?

Many people assume that having a will in place means they no longer need to review or update their nomination across different investments. However, the two serve different purposes.

A will mentions how you want your assets to be distributed after your death, while a valid nomination helps the financial institution to determine and process the claim. Like we discussed before, a nominee only acts like a custodian of the assets until the rightful legal heirs receive them.

The final ownership of money in a bank account, mutual fund, or other assets is generally determined by a valid will, succession laws, and the rights of legal heirs, not merely by the nominee mentioned in the account.

If the deceased person has left a legally valid will, the assets are distributed according to that will. In the absence of a will, the applicable inheritance or succession laws decide who has the rightful claim over the money and property.