New Delhi, Jan. 26 -- For most households, filling out a nomination form feels like settling succession itself. Once a nominee is named for a bank account, insurance policy, or mutual fund, there is a widespread assumption that the nominee automatically becomes the owner after death. In reality, nomination simplifies paperwork for financial institutions and doesn't determine inheritance.

"Assets always ultimately go to heirs under succession laws or according to a valid Will," said Shraddha Nileshwar, head, Will & Estate Planning at 1 Finance.

This distinction can determine whether a family moves on in peace or drags disputes into court.

The purpose of nomination is to ease the procedural transfer of assets when a person dies. When a v...