All you need to know about nomination in mutual fund schemes

Nomination is the process of appointing a person to take care of a mutual fund investor's assets in the event of death.

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Nomination is a facility provided by the fund house by which a unitholder can nominate a person. On death of the individual the nominee can claim the units held by the unitholder or the redemption proceeds.

What does nomination in a mutual fund folio mean?
Nomination is the process of appointing a person to take care of your assets in the event of death. Nomination facility is mandatory for new folios/accounts opened by individuals, where the mode of holding is single. Fund houses now do not allow new folios/ accounts for individuals in single holdings without nomination.


Who can be a nominee?
A nominee can be any person -- a family member or a friend or any other person whom you trust. You can even nominate a minor to be a nominee. In that case though, the guardians of the minor would exercise control over the mutual funds till the nominee turns 18 years old. Investors can also have multiple nominees in a mutual fund and choose the percentage to be given to individual nominees. In case you want a certain nominee to receive a greater share than the others, you can specify that, too.

How does an investor make a nomination?
The mutual fund application form asks for the nominee details. You can fill in the particulars there. Individuals holding accounts either singly or jointly can make nomination. Non-individuals including society, trust, body corporate, karta of Hindu undivided family (HUF) and holder of a power of attorney do not have the power to nominate. The nominee appointed has to be an individual only. Nomination for joint holders is permitted. However, in the event of death of any of the holders the benefits will be transmitted to the surviving holder. In the case of death of all holders, the benefits will be transmitted to the nominee account.

What are the benefits of registering a nomination?
When a nomination is registered, it helps facilitate easy transfer of funds to the nominee(s) in the event of demise of the investor. However, in the absence of a nominee, the heirs/claimant will have to produce a host of documents like a will, legal heir certificate, no-objection certificate from other legal heirs etc. to get the units transferred in his/her name.

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What if there is no nominee in my previous investments?
If you haven’t made a nomination in your old investments, there is no need to worry. You can easily add a nominee to the existing mutual fund folio by filling a form and submitting it to the fund house.

Once a nomination is made, can it be changed?
The nominee can be changed/added/subtracted anytime should an investor wish to do the same
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