Can a Nominee Refuse to Share Money With Legal Heirs?

Short answer: Yes, a nominee CAN refuse. But it’s legally wrong, and they’ll lose in court.

A family member passes away. The nominee collects the bank balance or insurance payout. And then… they don’t share with the other legal heirs. Maybe they think being the nominee makes them the sole owner. Maybe they’re hoping the heirs won’t fight back.

Whatever the reason, the law is clear: nominees are custodians, not owners. If they refuse to share, legal heirs have strong remedies.

What the Law Actually Says

The Supreme Court has been crystal clear on this, most recently in the landmark 2023 judgment Shakti Yezdani v. Jayanand Jayant Salgaonkar:

“Nomination does not confer absolute ownership. The nominee holds assets only as a temporary custodian until legal heirs claim them.”

This wasn’t a new principle. The Court had said the same thing back in 1984 in Sarbati Devi v. Usha Devi:

“A nomination only indicates the hand which is authorised to receive the amount. The amount can be claimed by the heirs of the deceased in accordance with law of succession governing them.”

And in 2025, the Karnataka High Court in Smt. Neelavva v. Smt. Chandravva reaffirmed that nominees “hold no beneficial title and cannot override succession laws.”

The pattern is consistent across four decades of judgments: nominees are trustees, not owners.

For a deeper explanation, see our guide on nominee vs legal heir in India.

What Legal Heirs Can Do If a Nominee Refuses

If a nominee refuses to share, legal heirs aren’t helpless. They have several options:

1. Send a Legal Notice

Start with a formal legal notice through a lawyer. This puts the nominee on official notice, creates a paper trail, and often resolves the matter without court. Many nominees cooperate once they receive a legal notice explaining their obligations.

2. File a Civil Suit for Recovery

If the legal notice doesn’t work, file a civil suit in district court claiming recovery of your share, interest on the amount withheld, and legal costs. Courts consistently rule in favor of legal heirs.

3. Obtain a Succession Certificate

A succession certificate establishes who the legal heirs are and their respective shares. Once you have this, banks and institutions will recognize your claim regardless of what the nominee says.

Is Refusing to Share a Criminal Offense?

Generally, no. A nominee refusing to share money with legal heirs is primarily a civil matter, not a criminal one.

However, there are circumstances where criminal liability could arise:

Criminal Breach of Trust (Section 316 BNS, formerly Section 406 IPC)

If a nominee:

• Was clearly informed they’re holding assets in trust
• Dishonestly misappropriates or converts the property to their own use
• Refuses to return it despite legal demand

This could potentially constitute criminal breach of trust, punishable by up to 5 years imprisonment under the new Bharatiya Nyaya Sanhita (increased from 3 years under the old IPC).

But in practice: Courts typically treat nominee disputes as civil matters unless there’s clear evidence of fraud or criminal intent. Most cases are resolved through civil suits.

The More Common Path: Civil Liability

When a nominee refuses to share, they face suits for recovery, interest on wrongfully withheld amounts, legal costs, and potential breach of trust claims under the Indian Trusts Act, 1882. They gain nothing by refusing - they’ll eventually pay anyway, plus interest and costs.

Court Cases Where Nominees Were Forced to Share

Indian courts have consistently ruled against nominees who try to keep everything:

Case 1: Brothers Fighting Over Father’s FD

A father named his eldest son as nominee on a ₹80 lakh FD. The son refused to share with his two sisters. Court ruling: Under the Hindu Succession Act, all three were Class I heirs with equal rights. The son was ordered to divide the amount equally, plus interest.

Case 2: Second Wife vs First Wife’s Children

A man nominated his second wife on his ₹1 crore insurance policy. His children from his first marriage challenged this. Court ruling: The children were entitled to their share as legal heirs. The nominee couldn’t claim everything simply because she was nominated.

Case 3: Friend Named as “Convenience” Nominee

A man named his friend as nominee on his Demat account, intending for the friend to distribute to family. The friend kept everything. Court ruling: The friend was ordered to transfer all shares to the legal heirs. A nominee has no ownership rights.

The Best Solution: Prevention

The easiest way to avoid this problem? Make sure your nominees ARE your legal heirs.

If your will says your daughter should inherit your insurance policy, make her the nominee too. When nomination and succession align, there’s no conflict.

What to do today: Review all your nominations, check if they match your intended heirs, write a will, and communicate with your family about who gets what.

Frequently Asked Questions

Can a nominee legally refuse to give money to legal heirs?

They can physically refuse, but have no legal right to keep the money. Heirs can sue and will win, and the nominee may face interest charges and legal costs.

What if the nominee says “the deceased wanted me to have it”?

Verbal wishes don’t override succession law. Only a valid will can ensure someone specific inherits.

Does being a nominee give any ownership rights?

No. A nominee only receives assets on behalf of the estate and holds them as trustee until legal heirs claim their shares.

Can I file a police complaint if a nominee refuses to share?

Police typically treat this as a civil matter. A civil suit is usually more effective. Criminal breach of trust charges are possible but harder to establish.

What if the nominee has already spent the money?

The civil suit can still proceed. Courts can order the nominee to pay the equivalent amount plus interest, with recovery through attachment of their other assets if needed.

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The Bottom Line

A nominee can refuse to share - but they’ll lose if it goes to court.

Indian law is unambiguous: nominees are custodians, not owners. The Supreme Court has said this repeatedly over four decades. Legal heirs have the ultimate claim.

If you’re a legal heir facing a stubborn nominee: send a legal notice, then file a civil suit. The law is on your side. If you’re planning your estate: align your nominations with your will. Prevent this problem before it starts.