Independence Day 2026: Nomination Vs Will, Why Every Family Needs Both

Independence signifies freedom, not just for the nation, but for individuals and families as well. This Independence Day, honour the freedom you have built for your family by securing it with both a Will and updated nominations.

When it comes to estate planning, the first thought is usually about the property, but there are financial assets as well that can easily be passed on to family members by just mentioning their name in the document to inherit the asset following your demise. To ensure that there is no dispute against the nominee for entitlement to receive the assets, one may write a Will, a legal document that ensures the intended bequeathal.

Nomination Vs Will

Under the nomination process, an account holder can make another person a nominee to get the financial asset in that account in case of the account holder’s death. While a nominee receives the asset, that person is not the ultimate beneficiary of that asset.

It is crucial to note that writing a nomination and writing a Will are legally different. If a person has nominated someone in their employee’s provident fund (EPF) account, bank account, mutual funds, demat account, or insurance policy, but their Will has a different beneficiary, who will get the asset or the money?

With families becoming more financially complex, with multiple bank accounts, mutual funds, digital assets, etc., why should they need a comprehensive nomination and Will strategy?

Let’s explore.

Is Nomination A Substitute For A Will?

Divi Dutta, Partner at Khaitan & Co, says, “A nomination and a Will serve fundamentally different purposes in succession planning,” and adds that a Will is a testamentary instrument under the Indian Succession Act, 1925 (ISA). It is a legal declaration of a person's intention regarding the disposition of his or her property after death. A nomination, on the other hand, is a statutory mechanism created under specific legislation to facilitate the transmission of a particular asset upon the death of its holder.

So, a nomination may identify the person entitled to receive an asset from the institution concerned; the ultimate devolution of the asset is governed by the Will. And in the absence of a Will, the intestate succession and personal succession rules apply, says she.

What Should Families Do When A Nominee And The Will Name Different Beneficiaries?

Though one should be careful to nominate the same person mentioned in the Will, and if not, update the accounts or the Will, as the case may be, in case both documents have different people as nominee and the beneficiaries, a Will always supersedes, subject to the condition that it is a valid Will.    

Dutta, referring to the Supreme Court judgments, explains, “If the nominee is different from the beneficiary under the Will, the beneficiary may then have to pursue the nominee to obtain the money or asset, potentially resulting in delay, family disputes and avoidable litigation. To avoid this, families should therefore treat nominations as an operational tool and ensure they are aligned with the testamentary intentions reflected in the Will.”

This highlights the need to keep the nomination and Will aligned to avoid unnecessary delay in account settlement and closure when the need arises.

The common mistake that people make is that they consider nomination as a substitute for writing a Will. They assume that the nominee will automatically be entitled to become the beneficiary owner of the asset, whereas in reality, a nominee serves as a trustee of the asset, and the ultimate beneficiary remains the ultimate beneficiary to inherit the asset.

Dutta highlights that updating nominee details is as important as making a nominee. She shares that such mistakes sometimes cause avoidable hassle. For example, nominations in favour of a former spouse, a deceased family member, or a person whom the individual no longer intends to benefit must be updated as the family circumstances change. Similarly, updating a Will following a major life event but leaving the nominations across bank accounts, securities and insurance policies unchanged can cause unnecessary issues and is avoidable.

Why Do Families Need Both?

Although the beneficiary mentioned in the Will is the ultimate person to whom the asset is bequeathed, getting the money from the bank account or the securities from a demat or a mutual fund account becomes a lengthy process in the absence of nomination.

Dutta says, “The practical difficulty is that the nominee may be the person who can approach the bank, financial institution or other intermediary and receive the proceeds or have the asset transmitted to him or her.”

So, estate planning, especially in the case of financial assets, requires the use of both nomination and the Will.

“A useful succession-planning exercise is to prepare an asset-wise schedule identifying bank accounts, demat accounts, mutual funds, insurance policies, provident fund and other investments, the current nominee for each asset, and the beneficiary contemplated under the Will. The nominations should then be reviewed against the testamentary scheme and, wherever appropriate, aligned,” says Dutta.

Remember that a Will ensures that your assets are bequeathed as per your wishes, and nominations help financial institutions to quickly identify the person intended to receive the accounts’ balance and policies. So, they need to be used together to prevent disputes, unnecessary delays, and hassle, and to enjoy the financial freedom you have always intended to provide them.