Succession vs nomination: Key insights into effective estate planning
-Name withheld on requestOne 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.
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