How to ensure phased payouts to your nominee in the case of death

livemint.com:

—Name withheld on requestTo ensure that your son receives the money from your MF investments, bank accounts and term insurance payout in phases, similar to an SWP in MFs, specific legal arrangements need to be made. One effective method is setting up a trust under the Indian Trusts Act, 1882. Establishing a trust involves working with a trusted lawyer or financial advisor to create a legal entity that will manage the distribution of your assets according to the terms you set.

Under the Indian Trusts Act, you can appoint a trustee who will manage the trust and ensure your son receives the payouts as per your instructions. The trust deed should detail the frequency and amount of distributions, ensuring a steady flow of funds rather than a lump sum.Additionally, you can specify beneficiary instructions for your financial accounts under Section 45ZA of the Banking Regulation Act, 1949, which allows nomination for bank deposits. For MFs, Securities and Exchange Board of India (Sebi) regulations allow setting up an SWP for beneficiaries.

This ensures that a fixed amount is withdrawn and transferred to his account periodically, in line with your phased distribution preference. For bank accounts, you can use the nomination facility under the Banking Regulation Act to facilitate phased payouts through a trust or direct instructions in your will. Fixed deposits can also be structured to release funds in installments.