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Savings Account

What is a bank account nomination

15 Apr 2022 by Team FinFIRST
bank account nomination
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When you open a bank account with a bank like Metra Trust, the form contains a field for adding a bank account nominee. You may have seen this in other financial products like mutual funds, demat accounts, etc too. Adding a nominee is a common practice for all financial assets. Let's find out why it is necessary to fill in a nominee for a bank account. Understanding the nominee meaning in bank account is crucial for ensuring the smooth transfer of assets in case of unforeseen circumstances.

What is a bank account nomination?


Bank account nomination refers to adding a family member as the nominee for your bank account. This is usually done to ensure that the money in the account is the hands of the successor authorised by the account holder in the unfortunate event of his/her demise.

Why do you need to add a bank account nominee?


Here are some situations where adding a bank account nominee can help:

1. If you get married


Ensuring your spouse has enough funds in the future is critical. By adding your spouse as a nominee right away, you protect their future financially.

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2. If you have children


By adding your child as a nominee, you ensure that your child gets access to your money in your absence. However, there are two things to note here:

  • If your child is an adult, they will be eligible to receive the funds present in your bank account
  • If your child is a minor, you will need to appoint another individual not being a minor, to receive the amount of the deposit on behalf of the nominee

3. If you are single and want to secure your loved ones


If you worry about your loved ones and their financial security in your absence, you should consider adding them as beneficiaries or nominees on your account. You can add a parent or even a sibling to your bank account as the nominee.

4. If you get divorced, widowed, or are remarried


Life is ever-changing, and so are relationships. Many a time, unexpected curveballs can change your marital status. It is essential to reflect the same in your financial planning as well. If your spouse was your previous nominee and you got divorced, you may want to remove their name. In such a case, you must immediately add a new bank account nominee. Additionally, if you lose your spouse, it may be prudent to put someone else's name. In the case of remarriage, you may want to add your new spouse's name. No matter the situation, ensuring you have a nominee is critical. 

Essential things you must know before choosing a nominee


Here are some things you can consider when selecting a nominee:

  1. It is not mandatory to update a nominee as per law, but you and your family can still benefit from it by adding a nominee. So, it may be in your favour to add a nominee to your bank account. For instance, Metra Trust offers competitive interest rates on savings accounts. This gives your savings an excellent power of compounding opportunity to grow your money. Adding a nominee to e the account will help you secure your loved ones in the future and allow them to benefit from the accumulated growth in the account balance.
  2. You can add only one nominee for a bank account. In case you want to add more than one person, you will have to do so on a different bank account.
  3. When adding a nominee, make sure you trust the person with your money. Putting some thought into who gets access to your hard-earned money is crucial. 
  4. You are allowed to change, cancel, and re-add your bank account nominee any time you want. There is no restriction on the number of times you can modify the bank account nomination. 
  5. Remember to update the nominee if there is any significant personal change in your life, such as marriage, remarriage, divorce, birth or adoption of children, and other similar conditions. 

These are a few key instances in life where adding a nominee can not only help you be at peace but significantly help your loved ones in trying times too. Bank account nomination is a small but critical step toward financial planning – one that you should not ignore for too long.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Metra Trust or its affiliates to any licensing or registration requirements. Metra Trust shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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