Why you should change nominations to benefit dependants after marriage Nomination is a facility that will help Atuls dependants easily get the money he has invested, in the unfortunate event of his passing away
Atul is a 35-year-old advertising professional, who has been investing since he started working 10 years ago. Recently, he decided to rearrange his investment documents and found that he had made nominations in favour of his parents and sister in many investments and insurance policies. Atul wonders if he should change these since he is married, or let them be because it will not impact his investments. He lives with his homemaker wife and two-year-old son. His parents live off a pension, though Atul supports them in case of sudden or large expenses. His wife is not too aware of investments and financial matters, and Atul wonders if he should nominate her or someone more knowledgeable about investments in the family. Are his concerns valid?Atul’s concerns on the need to change the nominations in line with the alteration in his family situation are valid. Nomination is a facility that will help Atul’s dependants easily get the money he has invested, in the unfortunate event of his passing away. Problems will arise if the nominees refuse to pass on the amount to his legal heirs and dependants, primarily his wife and children. It will then involve a long-drawn-out legal process before they get the money. This will definitely be something Atul would want to avoid and, therefore, he should consider changing his nomination in favour of the people he would want to benefit from the proceeds of his investments.
Atul can easily change the existing nominations by cancelling these and making new nominations. He does not require the consent of the earlier nominees to cancel these and can change the nominations as many times as he wants to. The nominees will not be involved in any decisions related to the investment that Atul would like to make at any time. Their role is only as recipients of the money when he is no more. Atul need not consider the ability of the nominee to manage their financial affairs at the time of making the nomination.
As far as possible, Atul must make the nominations in way that the chances of dispute remain low. This would primarily be in favour of his wife, children and parents. He can make multiple nominations and specify the percentage that each nominee would be entitled to. If he is nominating his minor children, then he will also need to specify their guardian. It may require a little work in terms of estimating the sum that he would like each dependant to have, and the associated paperwork, but it would ensure that the benefit of his investments is made available to those it is intended for.
Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
This story originally appeared on: India Times - Author:Faqs of Insurances
