Plan your nominations wisely
Harish Saxena is a 48-year-old business executive and has two children. His daughter works with an NGO and Harish and his wife are planning to get her married soon. Their son plans to do an undergraduate course in a foreign university. Harish provides a monthly income to his parents, who are dependent on him. He has made sure that his family's needs and wants have been taken care. Of late, Harish has been planning to nominate beneficiaries for his investments. What are things he should keep in mind while doing so?
Nomination and joint holding are two of the simplest ways to identify beneficiaries for investments. Harish needs to make sure that the beneficiary is someone whose needs can be taken care of in the future by the specific investment. For instance, Harish can earmark some of his mutual fund investments for his son's foreign education and make him the nominee.
Similarly, his parents can be the nominees for his investments in fixed deposits and small savings schemes, while his wife can be nominated for his insurance policies. In this manner he will ensure that the money earmarked for his dependants' needs is available to them without any dispute even if he is not present. It would be helpful if Harish maintained a dossier for his investments. If he makes any change in the nomination, he should update this record so that there is no confusion later.
Since situations and needs change, reviewing the nominations periodically will ensure that it continues to be relevant. Informing the nominees that they have been chosen is also a good practice. If there is an option for more than one joint holder or multiple nominations in a product, Harish must use it so that the investment is protected even if one nominee passes away. If Harish plans to write a will, he must make sure that the provisions of the will are in line with the nominations made. Otherwise, it could lead to disputes and the provisions of the will would take precedence over the nominations made. By take all the steps mentioned above, Harish can make sure that the financial interests of his family are protected even if he is not there to manage it.
Source: Economic Times
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