The account has a nominee. Does the nominee keep the money?
No. A nominee is a receiver, not an owner. The Supreme Court confirmed this in Shakti Yezdani v Jayanand Salgaonkar (December 2023): nomination decides who the institution pays, and succession law decides who the money belongs to. A nominee who keeps a share belonging to another heir can be made to account for it.
Why the distinction exists
Nomination was created to give banks and companies a safe person to pay, so that funds are not frozen for years while a family sorts itself out. It was never meant to override succession law, and the courts have consistently said so.
The practical effect is that the eldest son named as nominee on every account does not thereby inherit everything. His sisters and mother remain entitled to their statutory shares.
What a nominee should do
Collect the money using the nomination — that part is genuinely quicker. Then distribute according to the legal shares, and record the distribution in a family settlement or an affidavit signed by all heirs.
This protects the nominee. Without it, a sibling can raise a claim years later, and the nominee is the one holding the money.
Where nomination does confer ownership
There are narrow exceptions where a specific statute says otherwise, and insurance is the one families encounter most: under section 39 of the Insurance Act, a "beneficial nominee" — a parent, spouse or child named by the policyholder — takes the proceeds beneficially rather than as a trustee.
If you are unsure which applies to a particular policy, that is a question for an advocate rather than for a website.
Find out what your case needs
The free check applies all of the above to your actual family and your actual accounts, and tells you the shares and the document list in two minutes.
Related
Last reviewed 2026-08-22. This is general information, not legal advice. Institution requirements change — confirm before you file.