Importance of Nominee in InvestmentsPosted by Infiny Solution on June 14th, 2023 Investing your hard-earned money can be an important step towards securing your financial future. However, it is equally important to ensure that your investments are well-protected and managed. One way to do this is by appointing a nominee for your investment accounts. In this blog, we will explore the importance of a nominee in investments. What is a nominee?A nominee is a person appointed by an investor to act on their behalf in case of their untimely demise. The nominee can be a family member, friend, or anyone the investor trusts. The nominee is responsible for receiving the benefits of the investment in case of the investor’s death. Importance of a nominee in investments:1. Ease of asset transfer/ Transmission: When an investor dies, the legal process of transferring assets to their legal heirs can be time-consuming and complicated. However, if a nominee is appointed, the process becomes much easier and faster. The nominee can receive the benefits of the investment and distribute them among the legal heirs as per the investor’s wishes. 2. Avoiding legal disputes: In the absence of a nominee, legal disputes can arise among the legal heirs over the distribution of assets. This can be particularly problematic if there are multiple heirs, each with their own interests. Appointing a nominee can help avoid such disputes as the nominee acts as a mediator and ensures that the assets are distributed as per the investor’s wishes. 3. Protection of investments: Investments made by an investor represent their hard-earned money. Appointing a nominee ensures that the investments are protected even in the event of the investor’s death. The nominee can continue to manage the investments and ensure that they are not misused. 4. Privacy: Appointing a nominee also ensures that the details of the investment account are kept confidential. In the absence of a nominee, the legal heirs may have to provide details of the account to various authorities, which can compromise the investor’s privacy. 5. Peace of mind: Appointing a nominee can give the investor peace of mind knowing that their investments are in safe hands. It also ensures that their wishes are respected even after their death. 6. Unclaimed Shares: Nominees can also help prevent the occurrence of unclaimed shares. Unclaimed shares are those that have not been claimed by their rightful owners for a long period of time. This can happen due to various reasons such as incorrect contact information or the death of the shareholder without proper transmission of shares. Nominees can help ensure that investors’ contact information is up-to-date and that shares are properly transmitted to legal heirs, thereby reducing the likelihood of unclaimed shares. 7. IEPF Retrieval: Finally, nominees can play an important role in the retrieval of shares from the IEPF. The IEPF serves as a repository of unclaimed shares and dividends. Investors who have unclaimed shares can retrieve them from the IEPF by following the necessary procedures and submitting the required documents. Nominees can assist in the retrieval process by providing the necessary information and documentation required for the transfer of shares. 8. Can save complex process of obtaining Succession Certificate: Yes, appointing a nominee can save investors from the lengthy and often complex process of obtaining a succession certificate. A succession certificate is a legal document that is issued by a civil court to the legal heirs of a deceased person. It grants them the right to inherit the assets of the deceased, including investments such as shares and mutual funds. Obtaining a succession certificate can be a time-consuming and expensive process, as it involves hiring a lawyer and going through a legal procedure. The legal heirs of the deceased have to provide evidence of their relationship to the deceased, such as birth certificates and marriage certificates. They also have to provide details of all the assets of the deceased, including investments, bank accounts, and property. Appointing a nominee for investments can help investors avoid the need for a succession certificate. In the event of the investor’s death, the nominee can ensure that the investment portfolio is transferred to the legal heirs without the need for a succession certificate. This can save legal heirs both time and money, as they will not have to go through the legal procedure of obtaining a succession certificate. ConclusionIn conclusion, appointing a nominee for investments is important for various reasons, including the transmission of shares, duplicate share certificate process, prevention of unclaimed shares, and retrieval of shares from the IEPF. Nominees can play a critical role in ensuring that investments are properly protected and managed, and that legal disputes are avoided. Like it? Share it!More by this author |