This is the single most common misunderstanding we encounter in household finances, and it is entirely fixable in an afternoon.
The distinction
A nominee is the person an institution pays out to. Banks, insurers and depositories need someone to hand the asset to, and the nomination tells them who.
Under settled Indian law, in most asset classes the nominee generally receives that asset as a trustee for the legal heirs, not as its beneficial owner. They hold it; they do not necessarily keep it.
A will determines beneficial ownership. Where the two disagree, the will governs — and the resulting dispute is entirely predictable and entirely avoidable.
How they drift apart
Nominations are made once, at account opening, and then forgotten.
A policy nominates a parent. Twenty years later there is a spouse and two children, a will that reflects them, and a nomination that still names the parent. Nobody has done anything wrong. The paperwork simply never caught up with the life.
Multiply that across six bank accounts, four policies, a demat account and two mutual fund folios, and the probability that all of them agree with a will written last year is low.
The inventory nobody writes
Ask most families where everything is and the honest answer is that one person knows most of it and nobody knows all of it.
The single most useful document to leave behind is not the will. It is a list: every account, policy, holding and property, which institution holds it, and where the paperwork lives.
It does not need a lawyer. It needs an afternoon and somewhere safe, with one other person knowing it exists and how to reach it.
For business owners, one more layer
A shareholding without a shareholders’ agreement is a succession problem waiting to happen.
If a shareholder dies, their shares pass to their heirs — who may have no interest in the business, no experience of it, and no working relationship with the surviving partners. The remaining partners meanwhile have a business to run with a new co-owner they did not choose.
The mechanism for handling this is straightforward and needs to be documented before it is needed: what happens to the shares, on what basis they are valued, and how the purchase is funded. That last part is frequently where cover comes in.
What to do, in order
Write the inventory. It costs nothing and it is the highest-value item on the list.
Then check every nomination against your intentions, and correct the ones that have drifted.
Then, for anything substantial, get a will drafted properly and consider registering it — registration is not required for validity in India, but it makes a challenge considerably harder.
Then, if there is a business, the shareholders’ agreement.
