Investing in mutual funds is an excellent way to build wealth, but have you considered what happens to your investments after you’re gone? Selecting a nominee ensures that your assets are transferred seamlessly to someone you trust, protecting your family from legal and financial hassles.

1. What Is a Nomination?

Nomination is a facility that allows mutual fund investors to appoint up to 10 individuals to receive their units in the event of their death. You can also specify the percentage of allocation for each nominee. If not specified, the Asset Management Company (AMC) will distribute the units equally among all nominees.

2. Why Nomination Matters

· Easy Transfer of Units: Nominees can claim the units without lengthy legal procedures, making the process faster during emotionally difficult times.

· Financial Security: Immediate transfer provides financial support to your loved ones when they need it the most.

· Avoids Legal Complexities: Without a nominee, heirs may need succession certificates, probate, or legal heirship documents, which are time-consuming and costly.

· Saves Time and Money: Simplifies paperwork and reduces legal expenses associated with transferring units.

· Peace of Mind: Knowing your investments are secured for someone you trust brings comfort and assurance.

3. Who Can Make a Nomination?

· Individual investors holding units singly or jointly

· Mandatory for single holding folios; optional for joint folios

4. How to Nominate

· At the time of purchase: Fill the ‘Nomination’ section in the mutual fund application form.

· Subsequently: Submit the prescribed nomination form at the AMC’s investor service center or online.

· Nominations can be changed anytime, any number of times.

5. Who Can Be a Nominee?

· Any individual, including minors, NRIs, and guardians for minors

· government bodies, local authorities, or religious/charitable trusts

· Excludes companies, partnerships, HUFs, or societies

6. Rule of Survivorship in Joint Accounts

· If units are held jointly, surviving holders inherit the units

· Ownership is transferred to the surviving holder(s), not as trustees

· Existing nominations can continue or be updated by surviving holders

7. How Nomination Works

Nominees must complete simple formalities to claim units:

· KYC compliance

· Submission of death certificate

· bank account details

· Attested signature of the nominee

· Proof of guardianship (if the nominee is a minor)

· Other documents as required by the AMC

8. Nomination in Demat Mode

· Nomination registered with the depository applies to all mutual fund units held electronically

· Changes, cancellations, or substitutions are governed by depository rules

· Joint account units go to surviving holders; only upon the death of all joint holders do nominees receive the units

9. Legal Implications

· Nominees act as trustees, not owners

· Nomination is rescinded upon redemption of units

· Payment to the nominee discharges the AMC from further liability

· Any legal claims due to nomination require indemnification from the investor’s estate

10. Final Thoughts

Nomination is a simple yet powerful tool to protect your investments. It ensures your mutual fund units reach your loved ones smoothly and efficiently, avoiding delays, legal complications, and financial stress.

💡 Tip: Regularly review and update your nominations to reflect changes in your personal circumstances.

 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.