Nomination is an operational instruction to the institution on who can receive the proceeds or facilitate transfer when you die. It is not always the same as inheritance. In practice, legal ownership is determined by succession law and your will, while nomination is designed to make the payout or transfer process smoother. This difference is most visible in insurance, where nomination is governed under section 39 of the Insurance Act framework and has specific treatment for close family nominations.
Mistake 1: Leaving some accounts without a nominee
People usually nominate in one or two places and forget the rest. The gaps tend to be older fixed deposits, a secondary bank account, an old demat account, a small mutual fund folio, or an EPF account that was never updated after a job change. The practical cost is not the asset size, it is the friction. Your family ends up chasing documents, signatures, and sometimes court processes because each institution has its own claims workflow. Treat nomination like KYC: it is only done when it is done everywhere.
Mistake 2: Assuming one nominee covers everything
A nominee in your bank does not automatically become the nominee for your locker, your demat, or your mutual fund folios. Each product line has its own nomination record. In securities markets, SEBI has repeatedly clarified processes around nomination and opt-out for demat and mutual funds, and it has updated the framework over time. The safest approach is to list all institutions and products you hold and update nominations one by one.
Mistake 3: Not using the new flexibility in nominee choices
From November 1, 2025, key nomination-related provisions under the Banking Laws Amendment Act, 2025 have taken effect. This matters because banking nominations are getting more flexible and easier for families to execute, including the ability to name multiple nominees in certain cases. If you are still running with a single nominee across all bank accounts out of habit, review whether splitting nominees and specifying shares better reflects what you want and reduces family conflict.
Mistake 4: Naming a minor but skipping the guardian step
If you name a child as nominee, most institutions will require a guardian to be recorded so the claim can be handled until the child becomes an adult. Missing guardian details is one of the most common reasons nominations fail in real life, because the institution cannot release money directly to a minor. This is especially important in EPF, where the online e-nomination process expects accurate dependent details and documentation.
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