How to add a nominee in mutual fund?

Mutual funds have been a popular investing choice nowadays. Yet, there is one important feature of mutual funds that most people overlook: mutual fund nomination. Nomination is a facility that allows an individual unitholder (including a single proprietor of a sole proprietary company) to designate a person who can claim the unitholder's Units or redemption profits in the case of the unitholder's death. If the Units are owned jointly by more than one person, all joint unit holders must mutually select a person to whom all rights in the Units would pass if all joint unit holders died. According to Regulation 29 A of the SEBI Mutual Funds Rules, 1996, mutual funds must give individual unitholders the option to designate in the manner described in the Fourth Schedule. Here is how you can nominate someone in mutual fund.

Benefits Of Adding A Nominee

• Naming a nominee assures that your loved ones are taken care of in your absence. It eliminates doubt and ambiguity while ensuring that your investments are handed on to the proper successors.
• Nominations for mutual funds allow you to add up to three nominees and specify their proportion of stake. This reduces the breadth of family members' arguments. There is no room for deception or dispute, and all of your loved ones receive their fair portion.
• If you do not name a nominee for your mutual fund portfolio, your family members may be required to show a will or a no-objection certificate in order to claim the mutual fund units.
• For a bereaved family, this may be a terrifying and time-consuming procedure. But, the correct nomination guarantees that your loved ones receive their due part as soon as possible.
• You may enjoy a stress-free life with the knowledge that your money is safely invested and will be passed on to the person of your choosing after you.

Who is eligible to be a nominee?

• Any individual, including minors, may be nominated other than a company/body corporate, partnership business, Hindu Undivided Family (HUF), society, or trust (other than a religious or benevolent trust).
• If the candidate is a minor, the customer making the nomination must include the name and address of the minor nominee's guardian.
• Even a non-resident Indian (NRI) can be a Nominee, according to the current exchange control restrictions.
• Nominations may also be made in the name of the Central Government, a State Government, a municipal authority, any individual identified by virtue of his or her position, or a religious or benevolent institution.

Who cannot be a nominee?

• A Power of Attorney (PoA) holder and a guardian investing in mutual fund units on behalf of a minor are not permitted to nominate.
• In the case of a minor, a guardian is appointed to manage the minor's financial affairs until the minor reaches the age of majority. Transactions done via the guardian when a kid is a minor must be confirmed by the minor after reaching the age of majority. As a result, the guardian is not permitted to be a nominee in the same account, since it is the entire decision of the child after achieving the age of majority.

How to add a nominee?

• Nominations can be made either at the time of the original application for Unit acquisition or afterwards.
• To make a nomination when investing in a mutual fund for the first time, fill out the 'Nomination' portion of the account opening application form. And, in order to file a nomination, the investor must fill out the appropriate Nomination form and send it to the mutual fund's authorised investor care centre or its Registrars.
• After a nomination is made, it can be altered at any moment and any number of times.
• A person may nominate up to three people, explicitly indicating the percentage of allocation/share in favour of each nomination against their names, and such allocation/share must be in whole numbers with no decimals. If no percentage of allocation/share is given for each nomination, the AMC will resolve the claim evenly among all nominees.
• The Nomination Form must be signed by the unit holder (with hand-written signature). If the units are owned jointly, all joint holders must sign the nomination form, regardless of how the account is operated (i.e., whether by 'anyone or survivor' or 'jointly').