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Nominee vs. Legal Heir: Who Gets Your Estate After You?

When you open a simple bank account or invest in a policy, you’re often asked to name a nominee. A nominee is a person designated to withdraw money from your policy, account, or scheme in case of your absence. However, this doesn’t necessarily mean that the nominee will inherit your property. In reality, your legal heirs are the rightful owners of your estate.

If the nominee is one of your heirs, they might receive a share of the property. However, if your nominee is a friend or an acquaintance, they will only be able to withdraw the funds but won’t own the property. This is where people often confuse the role of a nominee with that of an heir. Let’s explore the key differences between the two.

Who Is an Heir?

An heir is a person who is either named in a legal will or recognized under inheritance law as a rightful owner of the property. If your nominee is one of your legal heirs, they are entitled to a share of the estate. However, if you want a specific nominee to inherit all your property, you must explicitly mention their name in your will.

Class-1 and Class-2 Heirs

According to inheritance law, Class-1 heirs have the first right to the property, and the distribution among them is equal. Class-1 heirs include sons, daughters, widowed spouses, and mothers. If there are no Class-1 heirs, Class-2 heirs, such as fathers, grandchildren, and siblings, may inherit the property. In the absence of both classes, distant relatives by blood may become the rightful heirs.

Who Is a Nominee?

A nominee is merely a caretaker or guardian of the property. After your passing, they can claim and manage the funds, but they don’t gain ownership rights. If your nominee is one of your legal heirs, they may receive their share of the property. But if the nominee is an outsider or friend, they are responsible for handing over the funds to the rightful heirs unless their name is explicitly mentioned in the will.

Understanding the distinction between a nominee and a legal heir is crucial for proper estate planning and to ensure your assets are distributed according to your wishes.

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