Nominations, Joint Accounts And Wills: What Indian Investors Get Wrong About Inheritance

For many Indian investors, estate planning is reduced to a checklist, i.e. fill out a nomination form, add a family member to a joint account, and consider the job done. These steps appear sensible, even responsible. Yet they are also among the most common reasons inheritance disputes flood Indian courts, souring precious family relations long after the investor is gone.

Nominations and joint accounts are frequently mistaken for tools of succession. They are not! They are administrative conveniences, meant to facilitate transmission, not determine ownership. When relied upon as substitutes for a Will, they create precisely the uncertainty they were meant to eliminate.

The Nomination Myth

One of the most persistent misconceptions is that a nominee becomes the owner of the asset. Whether it is mutual funds, shares, bank deposits or insurance proceeds, the law takes a different view.

“A nominee is only a custodian, authorised to receive the asset from the institution after demise. Ownership flows strictly through a valid Will, or in its absence, under applicable personal succession laws - be it the Hindu Succession Act, Muslim personal law or the Indian Succession Act. Courts have repeatedly clarified that nominations do not override testamentary intent or statutory inheritance,” informs Shraddha Nileshwar, Vertical Head, Will & Estate Planning, 1 Finance.

Consider this familiar situation. Delhi-based Rajesh Sharma nominated his brother for a Rs 50-lakh mutual fund investment, believing it would simplify matters. His Will, however, left all assets to his wife. After his demise, the brother withdrew the funds, triggering litigation. The court ultimately enforced the Will but only after years of delay, legal expense and emotional strain for the family.

The Joint Account Trap

Joint accounts, especially those marked “either or survivor”, are often viewed as a seamless inheritance solution. In reality, they are legally fragile.

“While the surviving holder may gain immediate operational access, ownership does not automatically follow. Courts distinguish sharply between convenience and intention. Unless there is clear evidence that the deceased intended to gift the funds absolutely, the survivor remains accountable to the legal heirs,” says Nileshwar.

This issue frequently arises when parents add children as joint holders purely for ease of banking. After demise, withdrawals are challenged, and routine arrangements quickly turn into prolonged family disputes.

Where Investors Go Wrong

Most inheritance battles arise not from complex planning, but from misalignment and neglect for reasons such as outdated nominations, unchanged joint holdings and the absence of a Will. In such cases, the law, not personal intention, decides the outcome.

“The remedy is straightforward. Align nominations with your Will. Use joint holdings only where the intention is unambiguous. Review your estate plan periodically, especially after major life events,” suggests Nileshwar.

The uncomfortable truth is this: most inheritance disputes are avoidable. A clear, updated Will, consistent with account structures and nominations, prevents confusion, conflict and courtrooms.

For Indian investors, the real question is no longer whether assets are nominated, but whether intentions are unmistakably recorded. If they are not, the law will decide instead and rarely in the way you expect.