Mutual Fund Nomination refers to appointing your trusted family member or a friend to take the charges of your holdings after your death. The main aim of nominating someone for your holdings is to keep your loved ones financially secure after your demise.
Some features of the Nomination facility
- You can nominate someone for both kinds of accounts, whether your single account or a joint account.
- A nominee doesn’t always become the legal heir. He only gets the responsibility to ensure that the right person gets the ownership after the previous owner’s demise.
- Nominees cannot be appointed for Charitable trusts, companies, and HUF(Hindu Undivided Family).
What Are The Advantages Of Adding A Nominee?
- Easy Transferability: After your demise, the family members can get the hassle-free transfer of your finances to them.
- No need to create a will: Due to the Nomination facility, people need not create another separate document of will to legally transfer ownership rights after the demise.
- Reduces family feuds: Your family need not visit the corporate offices and courts to get the legal rights of your investments.
How To Add A Nominee In A Mutual Fund Online?
Usually, at the purchase time, the buyer is given the option to add a nominee holder’s name. If the buyer wants to add the nominee, then a separate form is to be filled in which the following details need to be added:
- Nominee’s Name
- Date of birth.
- Relationship of the Nominee with the Investor
- Nominne’s Address
- Percentage share of each nominee (if there is more than one nominee)
NOTE: On one holding maximum of three nominees can be nominated with the division of their holdings after the passing away of the first owner.
How Can You Change A Nominee In A Mutual Fund Online?
Sometimes after nominating someone for your investments later on, after a period you feel that you want to change the nominees, there is no need to worry.
You can simply fill out an online or offline form and add the details of the new nominee.
How Can You Check The Nominee In Mutual Funds?
You can check the nominee of your mutual fund online or request the details from the concerned AMC. It is suggested to review your nominations after significant life events, such as marriage, divorce, or the death of a loved one, as these incidents can occur unexpectedly and affect your decisions.
Key Things To Remember About Mutual Fund Nomination
- Always nominate the trusted person
- Fill in the correct details of your nominee
- Always keep your nominee details updated, especially after major life events like marriage.
What Happens If You Do Not Have A Nominee?
In such cases, your legal heir can claim your assets or the government will take over the assets in case of the absence of any legal heir in the family. However, the AMC will transfer the units after reviewing the following documents:
However, to transfer the units, the AMC will need to review the following documents:
- The original or notarized death certificate of the deceased.
- KYC documents of the legal heir who is claiming the assets.
- A cancelled cheque that shows the bank account number and the account holder’s name. This must be attested by the bank branch manager. Alternatively, you can submit bank account statements attested by the bank branch manager.
- A self-certification document for Foreign Account Tax Compliance Act (FATCA).
- An indemnity bond that is signed by all the legal heirs of the deceased.
- A notarized will or a succession certificate has been issued by the court.
The legal heir must submit all these documents and a letter to transmit units and send them to the concerned AMC Nomination for Mutual Funds.
Final words
A mutual fund nomination is a crucial component of assets transference and succession planning, just like a will document. Consequently, it shouldn’t be disregarded. Instead, include candidates if you’ve invested in mutual funds or intend to do so in the future, as a better choice and safety.