If you have been told a bank account "goes to the nominee", the bank will pay the nominee. A commercial bank also tells the nominee in writing that the money is received as a trustee of the legal heirs. Without a nominee or a surviving joint holder, a commercial bank settles a claim below Rs 15 lakh, or a higher limit it sets, by a simplified procedure if there is no will, no contesting claim and no court order stopping payment. On a life policy, a nominated parent, spouse or child is beneficially entitled, though High Courts are divided when other heirs claim.

Where this page sits

When a bank or society asks your family for a legal heir certificate or a succession certificate, see how the two certificates differ. Where the person who died left a will, read how property passes under it.

Related guides:

• Legal heir certificate or succession certificate
• Transfer of property after death with a will

Who Gets the Money, the Nominee or the Legal Heir?

If the nominee and the legal heir are different people, the institution still pays the nominee, who holds a bank deposit for the legal heirs or for the person a will gives it to. Suppose your father nominated his brother on his savings account: the bank pays your uncle and its liability ends, but your mother, you and any other legal heirs can claim that money from him.

Who Is a Nominee?

A nominee is the person the holder names to receive an asset after his or her death. Nominations are made on bank accounts, fixed deposits, lockers, insurance policies, shares, demat accounts, mutual funds, provident fund accounts and housing society records, so that the institution knows whom to pay. For a bank deposit, section 45ZA(4) of the Banking Regulation Act, 1949 frees a bank that pays the nominee from liability and preserves every other person's claim against the nominee. A commercial bank tells the nominee the payment is received as a trustee of the legal heirs.

Who Is a Legal Heir?

A legal heir is a person entitled by law to inherit the deceased person's assets. A valid will decides who takes the assets it covers; without a will, the succession law that applies decides, and the legal heirs may include the spouse, children, parents or other relatives depending on the religion. Whether a nominee keeps what the institution pays depends on the kind of asset. Heirs may be asked for a legal heir certificate to prove their status.

What Is the Difference Between a Nominee and a Legal Heir?

The difference between a nominee and a legal heir is that a nominee is named to receive an asset, while a legal heir is entitled to inherit it. The nominee and the legal heir are often the same person.

Does a Nominee Become the Owner of Assets?

A nominee keeps the asset where he or she is also the sole legal heir, meaning the only heir, or the person the will gives it to. Otherwise, the Supreme Court has said that neither a bank nominee nor a share nominee becomes the owner. Life insurance is the exception: a nominated parent, spouse or child is beneficially entitled under the Insurance Act, although High Courts are divided when other heirs claim. On a PPF or post office savings account, the depositor chooses whether each nominee takes as owner or as trustee.

Bank Accounts, Fixed Deposits and Lockers: What Happens When There Is a Nominee?

A commercial bank paying a nominee needs only the claim form, the death certificate and the nominee's identity document, under the RBI's directions for commercial banks. It may not ask for a succession certificate, letters of administration, probate, an indemnity or a surety, whatever the amount. In a joint account the surviving holder is paid first, also as a trustee of the legal heirs, and the nominee's right arises only after every holder has died. Co-operative banks settle claims under their own RBI Directions.

Since 1 November 2025, a depositor can name up to four nominees, one after another or together. Nominees named together each need a percentage share covering the whole deposit, or the nomination counts as none. A locker nominee gets access to the contents only as a trustee of the legal heirs. Safe custody works the same way. When a depositor dies, a commercial bank must let a fixed deposit be closed early without a penalty, even inside a lock-in period.

Shares, Demat and Mutual Funds: Does the Nominee Own Them?

On 14 December 2023, in Shakti Yezdani v. Jayanand Jayant Salgaonkar (Civil Appeal No. 7107 of 2017), the Supreme Court held that a share nominee does not become the absolute owner: the shares pass to the nominee only for a limited purpose, and the legal heirs keep their claim against the nominee. The judgment covers the Companies Act, 1956, the matching section 72 of the Companies Act, 2013 and the Depositories Act, 1996. It also upheld the Bombay High Court's ruling that a bequest of shares in a will made under the Indian Succession Act, 1925 prevails over the nomination.

For listed securities and mutual fund units, SEBI's transmission framework, in force from 22 August 2026, says nominees receive them as trustee on behalf of the legal heirs. The company, registrar, depository participant or fund house has no further liability, and heirs take a disputed claim to court.

Life Insurance: When Does the Nominee Keep the Money?

Under section 39 of the Insurance Act, 1938, a parent, the spouse or the children named as nominees are beneficially entitled to the money unless it is proved the policyholder could not give that title, though a creditor's claim is not defeated. A nominee outside that group, such as a brother, is paid, but the Act does not make him beneficially entitled. This covers policies maturing for payment after the 2015 amending Act came into force, with section 39 in this form since 26 December 2014.

High Courts are divided on whether a beneficial nominee keeps the money when legal heirs claim it. On 20 February 2025, in RFA No. 100471 of 2023, the Karnataka High Court held that the amended section does not override succession law, so a beneficial nominee takes only if no legal heir claims. In that case a man had nominated his mother before he married, and his mother, widow and son took a third each. Two Andhra Pradesh High Court judgments and one Rajasthan High Court judgment hold that section 39 overrides the law of succession.

Provident Fund, PPF and a Housing Society Flat: Who Is Paid?

EPFO pays the provident fund to the nominee. Under the Employees' Provident Funds Scheme, 1952, a member with a family must nominate members of that family, which for a male member means his wife, his children (married or unmarried), his dependant parents and his deceased son's widow and children. The Scheme is silent on whether the nominee keeps the money or holds it for other heirs.

A PPF account closes when the holder dies, and neither the nominee nor a legal heir can continue it. Since 1 April 2018, a PPF or post office savings depositor specifies whether each nominee takes as owner or as trustee, under section 4(1) of the Government Savings Promotion Act, 1873.

A Maharashtra housing society transfers a deceased member's share and interest on testamentary documents, a succession certificate, a legal heirship certificate or a family arrangement among the heirs, or to the nominee, under section 154B-13 of the Maharashtra Co-operative Societies Act, 1960. The nominee is only a provisional member, with no right, title or ownership and no place on the share certificate, until the heirs or the person entitled under a will are admitted.

What Happens When There Is No Nominee?

Without a nominee, the legal heirs prove their claim with the documents required for that asset.

For shares and units, SEBI accepts a legal heirship certificate only if a revenue authority not below the rank of Tahsildar, or an equivalent authority, issued it.

How Can a Legal Heir Claim From a Nominee?

After payment, the claim lies against the nominee: under section 387 of the Indian Succession Act, 1925, anyone who receives a debt or security owed to the deceased stays liable to account for it to the person lawfully entitled. Heirs can go to court before the bank pays. A commercial bank that pays a nominee is protected only if, on the day it pays, it knows of no court order stopping the payment.

Heirs have sued nominees in the civil court, in Shakti Yezdani for a declaration, court-supervised administration and an injunction, and in the Karnataka case, where the widow and son each took a third. Heirs and a nominee who agree on the division can write it down as a family settlement.

How Can a Will Avoid Nominee vs Legal Heir Disputes?

Make the will and the nominations name the same people, and where a nominee is named only to receive, let the will say who is to keep the asset (how a beneficiary differs from a nominee). For shares, a bequest in a will made under the Indian Succession Act, 1925 overrides the nomination. A bank still pays the nominee whatever the will says, and the will's beneficiaries claim from the nominee. A later will can change an insurance nomination, but an insurer that pays the registered nominee in good faith is protected until it has written notice. Review the will and the nominations after a marriage, a divorce, a birth or a nominee's death.

How Does WillJini Help a Family Claim?

WillJini's inheritance assistance reviews the assets, the legal heirs and any will. That review shows which accounts carry a nominee and in what form, and WillJini draws up a step-by-step roadmap from it. WillJini identifies the heirs and gathers the no-objection letters or declarations a claim without a nominee needs, including from family abroad, with embassy or e-signature support. Where a certificate, an affidavit or an indemnity bond is needed above a limit, WillJini handles the court filings for a succession certificate, liaises with banks and authorities and drafts the documents. Once the claim is approved, WillJini transfers the accounts, lockers and investments into the family's name.

FAQs

Is a nominee the same as a legal heir?

A nominee is named to receive an asset, a legal heir is entitled to inherit it, and one person is often both. Where they differ, a bank pays the nominee and the heirs keep their claim against the nominee. Under the Insurance Act, a parent, spouse or child nominated on a life policy is beneficially entitled, though High Courts are divided when other heirs claim.

Does a nominee become the owner of a bank account balance?

Being named does not make the nominee the owner, because the Supreme Court has said the deposit is part of the deceased depositor's estate and follows the law of succession. The nominee keeps the money only if he or she is also the sole legal heir or the will's beneficiary.

Who has more right, nominee or legal heir?

For a bank deposit and for shares, the legal heirs or the will's beneficiary have the right, and the nominee holds the asset for them. On a life policy, the Insurance Act makes a nominated parent, spouse or child beneficially entitled, and High Courts are divided when other heirs claim.

Can a nominee be challenged by legal heirs?

Legal heirs can challenge a nominee before and after payment. A commercial bank that knows of a court order restraining payment when it pays the nominee is not released from liability, and once paid, the nominee stays liable under section 387 of the Indian Succession Act to account to the person lawfully entitled.

Can a nominee continue a fixed deposit after the depositor's death?

A commercial bank must let the fixed deposit be closed early without a penalty after the depositor's death, even inside a lock-in period, and the nominee receives the money as a trustee of the legal heirs. A PPF account closes on the holder's death, with no right for the nominee or a legal heir to continue it.