Having a nominee for your investments is an extremely important step in ensuring a smooth transfer of assets in case of death. Whether its property, a bank account or investments such as mutual funds, all avenues give you the option of naming a nominee - someone whom you want to inherit the asset.
However, its important to understand that simply including the name of a nominee is not enough to ensure a smooth transfer of ownership. For this, a will is an important requirement. Even with a nomination in place, in the absense of a will, the laws of succession will determine the transfer of ownership of the asset.
Harsh Roongta (Fee Only Investment Advisors LLP) provides an indepth explaination about the importance of nominations, how it helps and what are the limitations.
"A white paper written by the former group general counsel at ICICI Bank and now a senior official at one of the financial sector regulators, Pramod Rao (in his personal capacity) with inputs from ARIA (the Association of Registered Investment Advisors; a community of SEBI-registered investment advisors) proposes changes in the succession law to extend the arrangement pioneered for death claims under life insurance policies, wherein nominees can enjoy unrestricted rights to the amount without having to go through a gruelling legal process", says Roongta.