Is a simple nomination sufficient for estate planning?
Nomination is usually seen as the initial stage in estate planning. Is a nomination, however, sufficient for wealth distribution? Let us investigate.
Nomination is one of the fundamental things that you may have done as part of the process of purchasing financial assets or creating a bank account. People, however, often disregard this.
They even neglect to update it as they progress through the life cycle stages. In some cases, such as before marriage, you must offer nominations in the name of your parents. However, many people fail to amend their nomination after marriage and include their spouse.
People also believe that if they have done the nomination and are constantly updating it, they are practising estate planning. Though it is part of estate planning, you should sit down and evaluate how you want your possessions distributed when you are no longer alive.
Nomination simply makes the nominee trustee of assets, and it becomes the nominee's responsibility to divide them among legitimate heirs. Organisations typically advocate for nomination since it relieves them of the duty to disperse assets to legal heirs on your behalf.
However, if the nomination is not accessible for whatever reason, the assets are dispersed equally among the legal heirs. As a result, it is critical that you do not rely on the nomination and have a legal written and registered will in place.
This will allow you to conveniently transfer your assets following your death. A valid will takes precedence over a nominee. A probate will is difficult to contest in court. This can help to avoid future disputes among your legal successors.
But, it may prove to be costly. Though many counsellors recommend forming a trust these days, this may be a pricey endeavour. Which choice to choose for estate planning is undoubtedly determined by factors such as family structure, assets involved, complex connections, relevant succession legislation (like in India, different religions have their own set of succession law), and so on. To come up with a good choice, consult with a legal professional and a financial advisor.
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