How do legal frameworks governing testamentary and intestate succession differ from the role of a nominee in temporarily managing assets until the rightful successor is determined? What should I consider to ensure my estate plan is legally sound, minimises administrative burdens, and prevents potential disputes among heirs?
-Name withheld on request
One needs to understand the distinction between succession and nomination to ensure his estate plan is effective. In India, succession occurs through testamentary (through a valid will) or intestate (without a valid will) processes. Testamentary succession, governed by the Indian Succession Act, 1925, allows a person to dictate the distribution of his ir her assets upon death, ensuring control over the estate’s disposition.
Conversely, intestate succession follows personal laws, such as the Hindu Succession Act, 1956, which provides a predetermined order of inheritors, potentially leading to outcomes contrary to the deceased’s wishes.
On the other hand, nomination, as per Section 39 of the Insurance Act, 1938, and similar provisions in financial regulations, appoints a temporary custodian of assets, not the ultimate owner. The nominee’s role is to hold and manage assets until the rightful heirs, determined through succession laws, can claim them.
One should consider clearly defining asset distribution in a will and nominate reliable individuals to manage the assets temporarily, ensuring compliance with legal requirements, updating documents regularly, and communicating his plans to reduce disputes and administrative burdens.
Aditya Chopra is managing partner, and Amay Jain is a senior associate at Victoriam Legalis–Advocates & Solicitors
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Published: 25 Jun 2024, 05:43 PM IST