Difference between Nominee and Legatee
Does a nominee have the same rights as a legal heir or legatee in a will?
A nominee is not a legatee i.e. he is not entitled to inherit the property / any benefit from the deceased. A nominee only holds the property or money in question, in trust, for the actual legal heirs as named in the will. Nomination of a person in a bank account or any property (other than shares, debentues and insurance), does not give that person the right to inherit or derive any benefits from the property or account so nominated, he is only the custodian of the funds or property uptil the time that the rightful heirs have been determined.
Nomination of shares:
As per section 109 A of the Companies Act:
109A. Nomination of shares.—(1) Every holder of shares in, or holder of debentures of, a company may, at any time, nominate, in the prescribed manner, a person to whom his shares in, or debentures of, the company shall vest in the event of his death.
(2) Where the shares in, or debentures of, a company are held by more than one person jointly, the joint-holders may together nominate, in the prescribed manner, a person to whom all the rights in the shares or debentures of the company shall vest in the event of death of all the joint-holders.
(3) Notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise, in respect of such shares in, or debentures of, the company, where a nomination made in the prescribed manner purports to confer on any person the right to vest the shares in, or debentures of, the company, the nominee shall, on the death of the shareholder or holder of debentures of, the company or, as the case may be, on the death of the joint-holders become entitled to all the rights in the shares or debentures of the company or, as the case may be, all the joint-holders, in relation to such shares in, or debentures of the company to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner.
This means that the nomination in shares will supersede the bequest in the will. This means that the nomination shows full ownership of the shares.
Can the nominee and beneficiary / legatee be the same?
Yes, a nominee can also be the legatee for that property as named in the will.
Incase of nomination to one person and bequest to another person through a will, which one will take precedence?
Whatever is stated in the will, takes precedence over any form of nomination, as the will is considered to be the final word of the deceased person. Hence the nominee will have to transfer the benefit or authority to the rightful legatee named in the will.