This surprises almost everyone, so a quick PSA:
Your nominee does NOT inherit your money. For a bank account, FD, mutual fund or demat, the nominee only holds it and must hand it over to your legal heirs. So if you put your wife as nominee, your parents (who are also legal heirs) can still claim their share from her.
The only exception is life insurance. If you name your spouse, kids or parents there, they actually get the payout. If you name a sibling or friend, they are just holding it for the heirs.
In short, a nominee is a "hand it to this person" instruction, not "this person owns it." What really decides who gets your money is a will. No will means the law decides, not you.
EPF, property and shares each work a bit differently. Let me know which one you have and I'll explain.
Make a will and get it notarised.
The nominee is just a custodian. Draft a will and state that the nominee is the legal heir for that account - that makes things easier. Then you can change the nominee anytime without having to amend the will.
Most of us have spent ages filling in nominee details on every bank account, FD, mutual fund and demat, genuinely thinking we're deciding who gets our money after we die. In reality we're just naming an unpaid temporary custodian who must hand the assets over according to succession law - a law most of us never read and banks never explain. This gap in financial literacy is probably the biggest oversight by the Indian banking system, even though it would have helped a lot at account opening.
So what exactly does the bank do when you 'hand it to the nominee'? It gives the money to the nominee, who then has to pass it on to the legal heirs. That's basically what 'hand it to nominee' means.
Is it true that if I have a joint bank account with my nominee, that person will get the entire amount permanently and legally, without needing a will?