Difference between legal heir and nominee

Difference between legal heir and nominee

Author: Amit Singh

Who is a nominee? 

According to law, a nominee is a trustee and not the owner of the assets. He is only a guardian of your assets. The nominee will only hold your asset as a trustee and will be legally bound to transfer it to the legal heirs. A legal heir is entitled to the assets of the deceased. A legal heir will be the one who is mentioned in the will. However, if a will is not made, then the legal heirs of the assets are decided according to the succession laws, where the structure is predefined on who gets how much. The nominee, in turn, is supposed to hold the proceeds in trust and the legal heir can claim the money. A legal heir will be the one who is mentioned in the will. if a will is not available or written, then the legal heirs of the assets are decided according to the succession laws, where the structure is predefined on who gets how much.

Who is a legal heir? 

In India, there are different personal laws and many statutes are governing the issue of marriage, divorce, and succession. Over matters such as insurance, inheritance, identifying legal heir is important as they are the ultimate successor over the property under inheritance and also over insurance claims. Under common law, an heir is an individual appointed by law to succeed to the estate of an ancestor who died without a will. Term legal heir is commonly used to refer to a person who succeeds to property, either by will or law. If there is no will or stated legal heir, the property will be equally distributed as per the Hindu Succession Act, under the following tenets: 

  • Equal distribution amongst all Class 1 heirs
  • In absence of Class 1 heirs, equal distribution amongst Class 2 heirs
  • In case of no Class 2 heirs, distribution amongst Agnates and then Cognates
  • In the case of no one being present, the Government takes the property/ estate of the person deceased

As a result, it can be seen that the nominee is only the trustee of the property and has to hand the same over to the legal heir of the property, based on the will made by the person deceased.

What is the difference between Legal heirs and nominee?

According to law, a nominee is a trustee and not the owner of the assets. At the end of the day, he is just a guardian of your advantages. The nominee will just hold your asset as a trustee and will undoubtedly move it to the legitimate beneficiaries. A lawful beneficiary will be the one who is referenced in the will. However, if a will is not made, then the legal heirs of the assets are decided according to the succession laws, where the structure is predefined on who gets how much.

On a comprehensive understanding of legal points of reference throughout the years and the situation of law on this point now, it very well may be settled that Legal beneficiary is a definitive, rightful owner of the assets of a deceased individual {either through intestate or testamentary succession}; An individual who is named nominee of the assets of the deceased will get and hold the assets of the deceased promptly upon the death of the person.

The benefits of the legal heir to the riches is indefeasible. Fundamentally, the legitimate beneficiaries of a deceased who is hitched are companion, youngsters, and guardians, while, in the event of an unmarried deceased person, his or her parents and kin would be an ultimate legal heir.

In the year 2016, Bombay High Court laid to rest the position of a nominee versus a legal heir with the shares of an Indian company. The Court held that a nomination does not override the laws of succession in India. A nomination is made to ensure that the estate of the deceased is protected until such time the legal representatives of the deceased can take appropriate steps towards succeeding in such estate. Thus, the nominee of shares of an Indian company is not the legal owner of the shares, and therefore, the legal heirs of the deceased shareholder would have a rightful claim over such shares.

What is a nomination?

In the legal context, the nomination is only a provision for the claiming of property by the nominee as ‘custodian’, in case of the death/ demise of the owner of the property. However, there are some key aspects to note in this scenario: 

  • The nominee can only claim the property in case of death of the property owner
  • He or she will only be the trustee/ custodian for a temporary duration, until the establishment of the legal heir to the property/ estate, as per the Succession Act (or Will)
  • Thereafter, the nominee will hand over the property/ estate to the legal heir/ heirs, as per the law
  • The nominee and legal heir are different parties; the nominee may be the legal heir in case he/ she has been nominated for assets/ wealth, while his/ her name is also declared in the will as the clearly stated legal heir
  • Minor children may have guardian nominees who will hold responsibility for looking after the welfare of these children and safeguarding their share of the wealth of the deceased. A family trust or private trust may also be created for the benefit of children and legal heirs, in many cases

What is Important Things while Appointing a Nominee?

• Mention the Full Name, Address, age, relationship to yourself of the nominee.

 • Do not write the nomination in favor of wife and children as a class.

 • Give their specific names and particulars existing at that moment.

 • If the nominee is a minor, appoint a person who is a major as an appointee giving his full name, age, address and relationship to the nominee.

Why Do People Appoint Nominee?

When a person dies, he must make sure that the Insurance Company, Mutual fund, or his Shares should not stay with the companies and go to someone his trust, and who can further help, in the process of passing it to his legal heirs.

Otherwise, if a person dies and has not nominated anyone, his legal heirs will have to go through the process of producing all kinds of certificates like death certificates, proof of relation, etc. The whole process is highly time to consume (The process needs to be repeated for each legal entity – The insurance company, the mutual funds, for the shares, for the real estate…)

So, if a nominee exists, such hassles are avoided, since the company is bound to transfer all your money or assets to the nominee.

What status on legal heirs in Hindu and Muslim law?

In Hindu law for a male Hindu, here is an explanation of who is a legal heir along with their succession rights over the property.

  • Son,
  • Daughter,
  • Widow
  • Mother
  • Son of a pre-deceased son
  • Daughter of a pre-deceased son
  • Son of a pre-deceased daughter
  • Daughter of a pre-deceased daughter
  • Widow of a pre-deceased son
  • Son of a pre-deceased son of a pre-deceased son
  • Daughter of a pre-deceased son of a pre-deceased son
  • Widow of a pre-deceased son of a pre-deceased son.

The inheritance of the property shall take simultaneously and to the exclusion of all other heirs.

Who are the legal heirs when there is no surviving heir from the list above?

In such situations, the legal heirs are listed in Class II of the Hindu Succession Act. If there is no heir of class I, then the property goes to the heirs, being the relatives specified in class II of the Schedule of Indian Succession Act. Heirs under class II are,

Class II:

1. Father

2. 

·        Son’s daughter’s son,

·        son’s daughter’s daughter,

·        brother,

·        Sister

3.

  • Daughter’s son’s son,
  • daughter’s son’s daughter,
  • daughter’s daughter’s son,
  • Daughter’s daughter’s daughter

4.

  • Brother’s son,
  • sister’s son,
  • brother’s daughter
  • Sister’s daughter

5.

  • Father’s father
  • Father’s mother
  • Father’s widow
  • Brother’s widow

6.

  • Father’s brother
  • Father’s sister.

7. 

  • Mother’s father
  • Mother’s mother.

8

  • Mother’s brother
  • Mother’s sister.

The rule for succession is, those in the first entry in class II shall be preferred over those in the second entry, and those in the second entry shall be preferred to those in the third entry, and so on in succession and shared equally among the sub-classes.

Legal heir of Muslims under the Sharia law in India

Under the Sharia law, the following is the list of the legal heir.

Husband

Must be legally married. Secret or undocumented marriages are not eligible.

Wives

Multiple wives are eligible. Secret or undocumented marriages are not eligible. A divorced wife is eligible if the iddah period has not yet completed.

Sons

Adopted son, step-son, or illegitimate son is not eligible.

Daughters

Adopted daughter, step-daughter, or illegitimate daughter is not eligible.

Grandsons

Only son’s sons are eligible. Daughter’s sons are not eligible.

Granddaughters

Only son’s daughters are eligible. Daughter’s daughter’s are not eligible.

Father

Illegitimate father or step-father is not eligible.

Mother

Illegitimate mother or step-mother is not eligible.

Grandfather

Only the father’s father is eligible. Mother’s father is not eligible.

Paternal Grandmother

Father’s mother is eligible.

Maternal Grandmother

Mother’s mother is eligible.

Full Brothers

Brothers who share the same father and the mother with the deceased.

Full Sisters

Sisters who share the same father and the mother with the deceased.

Paternal Brothers

Brothers who share the same father, but a different mother.

Paternal Sisters

Sisters who share the same father, but a different mother.

Maternal Brothers

Brothers who share the same mother, but a different father.

Maternal Sisters

Sisters who share the same mother, but a different father.

Full Nephews

Only the brother’s son is eligible. Sister’s son is not eligible.

Paternal Nephews

Only the paternal brother’s son is eligible. Paternal brother’s daughter is not eligible.

Full Nephew’s sons

Full brother’s son’s son.

Paternal Nephew’s sons

Paternal brother’s son’s son.

Full Paternal Uncles

Father’s full brother.

Paternal Uncles

Father’s paternal brother.

Full Cousins

Father’s full brother’s son.

Paternal Cousins

Father’s paternal brother’s son.

Full Cousin’s Sons

Father’s full brother’s son’s son.

Paternal Cousin’s Sons

Father’s paternal brother’s son’s son.

Full Cousin’s Grandsons

Father’s full brother’s son’s son’s son.

Paternal Cousin’s Grandsons

Father’s paternal brother’s son’s son’s son.

What is the procedure for obtaining Legal heir succession certificate and how to apply ?

For the transfer of bank account, gas connection, electricity connection, house tax, and telephone connection it is important to obtain a legal heir certificate. 

Who can apply?

Wife or Husband or Son or Daughter or Mother may apply for a legal heir succession certificate.

How to apply?

Step 1 To apply for a legal heir certificate under District Thasildar Officer through the district court.

Step 2 Based on the report of the Village Administrative Officer and Revenue Inspector and after due inquiry, this certificate is issued by the Concerned Authority mentioning the names of all legal heirs of the deceased.

Step 3 Paper require for certificate;-

  • Deceased name
  • Family member Names and Relationship
  • Applicant Signature
  • Date of Application
  • Residential Address

Uses of Legal Heir Certificates

A legal heir certificate identifies the rightful successors who can claim the assets/properties of the deceased person.

Footnotes: 

www.wikipedia.org

https://indiankanoon.org/doc/685111/  (The Hindu Succession Act, 1956)

https://www.moneycontrol.com/news/business/personal-finance/-1973219.html

https://www.icicisecurities.com/ican-iwill/whats-the-difference-between-a-nomination-and-an-heir.html

https://www.pathlegal.in/Is-Legal-Heir-And-Nominee-The-Same–blog-2383040

http://www.legalserviceindia.com/legal/article-702-how-to-obtain-a-legal-heir-certificate-in-india.html

https://lawrato.com/indian-kanoon/muslim-law-law/inheritance-under-muslim-law-599

 

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