Can your legal heir claim their stake despite you having nomination?
Many individuals presumes that if they have mentioned nominee in their investments and insurance, the job is done but that’s not the end of it; rather it is the beginning step.
Nomination gives the institution like banks, fund house and insurance firm right to transfer the underlying asset to the nominee as stated in the investment/policy document. Despite nominee being the beneficiary, the legal heirs can still claim their stake in the person’s legacy.
Nomination is superseded by Succession act and Succession act is superseded by ‘Will’. A person’s will is always kept at the top even if it goes against succession act provided the Will is prepared with necessary due diligence.
It becomes extremely prudent especially for high-net-worth individuals to prepare a will so that the beneficiaries after his/her death can settle the transmission without any dispute. Individual having assets like physical gold etc where no nominee can be mentioned and real estate where nomination is rarely mentioned must prepare a will to avoid any disputes in future in their absence.
So what if a person dies intestate (without a will)?
Assets will be transferred as per nomination (although legal heirs can still legally demand their stake). Other assets with no nomination can either be mutually settled amongst the beneficiary and other beneficiaries in each case must provide NOC to facilitate the transmission. In case they are not able to mutually agree on one conclusion, the court will decide the split if and when they approach to them.
Can distant relative claim their stake?
Probably not, the Class 1 legal heir includes Spouse, Mother and kid of the deceased. If a person does not have any of these then Class 2 legal heir can claim the legacy where first priority is given to father of the deceased.
In case a person does not have any of the relatives mentioned above which is very rare then the legacy is passed on to other relatives and priority is given as per the succession act to be followed and depending upon the person’s list of relative which gets complex with each clauses and sub clauses further.
Hence it is better to prepare a will which makes the whole process much simpler else the court proceeding can have lot of time and money cost.