The misconception
When you open a bank account, a demat account, a mutual fund folio or a PF account, you are asked to name a nominee. Almost everyone treats this as deciding who inherits.
It is not. A nomination tells the institution who to hand the asset to. It settles a discharge problem for the bank — they pay the nominee, their obligation ends, and they are not dragged into a family dispute.
Who actually OWNS the asset after that is decided by succession law, or by a will if one exists. The nominee holds it for whoever those rules say the beneficiaries are.
What that looks like in practice
A father names his eldest son as nominee on a fixed deposit. He dies without a will. The son receives the money from the bank — correctly.
But under the Hindu Succession Act, the Class I heirs include the widow, all the children and the mother, in equal shares. The son who received the money holds most of it for the others. If he treats it as his, that is a dispute, and courts have repeatedly held that nomination does not override succession.
The family usually does not discover this until the money has already been spent.
The rules also differ by asset
This is what makes it hard to hold one mental model. Bank deposits, demat accounts, mutual funds, insurance policies, EPF and PPF each have their own nomination mechanics, and they do not agree with one another.
EPF nomination, for instance, is treated as conferring a beneficial interest under the scheme's own rules. Insurance has the position above, and even there the creditor protection comes from the Married Women’s Property Act specifically rather than from being a beneficial nominee. Bank and demat nominations are the plain trustee case.
The practical takeaway is not to memorise which is which. It is that nomination alone is never a substitute for saying, in writing, who you want to own what.
What to actually do
Keep your nominations updated everywhere — an ex-spouse still named on a PF account is a common and painful discovery.
Then write a will. It does not need to be on stamp paper, it does not need to be registered, and for most young people it fits on one page. It needs to be in writing, signed by you, and attested by two witnesses — and a gift in the will to a witness is void, so witnesses are best kept out of it. (Muslim personal law has its own, different rules for wills.)
If your situation involves property in multiple states, a business, a second marriage, or personal law questions across religions, this stops being a one-page problem. That is the point to talk to a lawyer, and it is much cheaper to do it now than for your family to do it later.