How To Use Multiple Nominees For Effective Financial Planning

One of the key aspects of holding a bank account is the continuation and use of the account and the money present in it in case of death of the account holder. Having a nominee is the best way to ensure that there is proper protection that is present for these accounts and deposits, as it ensures that the amount goes to the right person. Now, there is a proposal to increase the number of nominees in bank accounts to four and this will help in better planning for the account holders. There is a need for such a move and there are several reasons why this is important. 

A nominee for a financial investment is the first step in the entire process of ensuring that this is managed properly. The next question that arises once the nominee facility is available is the number of nominees that can be named for the investment. There are two aspects that have to be matched at this stage. One is the number of nominees that are actually required for the investment and the second is the number of nominees that are actually allowed by the financial institution, or other entity where the investment is made. For example, the existing banking guidelines in force allow for a single nominee as far as the bank accounts and deposits are concerned. This results in a position where only one nominee can actually be appointed. There is a move now to increase the number of nominees and this would mean that more than one person can be recorded as the nominee to get the payout. 

When it comes to investments made by a senior member of the family, there could be a desire of the individual to ensure that in his absence the amount is spread out between several people. It could be the spouse and the children of the individual, or it could be just the children or even grandchildren to whom the amount is sought to be ultimately given. This kind of situation is commonly faced by a lot of people, so in this case if there is the facility of multiple nominees that can be designated, then there would be a lot of convenience. It can ensure that the desired distribution is done at the initial stage itself, without the initial receiver having to subdivide the amounts and distribute it. 

Apart from the fact that there is a need to spread money among multiple people, there is also the question of the amount that has to go to each of them. Based on individual position and need, there might be a need to distribute the amount available in different proportions. An example of this could be a person in the family who is facing special challenges and hence a higher amount might be required to be allocated to such an individual. The process of multiple nominees ensures that this is completed in an effective manner. The exact amount or percentage that is sought to be given to a certain person can be designated and this will aid in completing the process smoothly. 

The biggest benefit of the move is actually in terms of the ease of the entire process of distribution of amounts on the death of an individual. Currently, with just one individual being allowed as the nominee, the entire amount goes to this person and then they have to distribute the amount further and this often creates complications and disputes. This can be completely avoided by making the right nomination with the required percentages. This will ensure a lot of time and effort is saved, especially when it comes to complying with all the requirements that are present. 

Arnav Pandya is founder Moneyeduschool.