Why You Appoint A Nominee For MF scheme?

IamCheated.com Research Team | April 13, 2018  7:21:pm

The main intention of accumulating wealth is to pass it to your children, when you are not around. You must make a nomination if you want your hard earned money to reach loved ones and not anyone else. Nomination facility in the mutual fund is offered to transfer the units to the concerned person, if something happens to policy holders.

What is a nomination in mutual funds?

A nomination is a process of appointing a person called the nominee to take care of your assets, in case something happens to you (The Unit holder). It is compulsory to appoint a nominee for the mutual fund schemes you hold. If you have mutual funds in the demat account, you must appoint a nominee for this account.

How to make a nomination while investing in mutual funds?

Every mutual fund scheme form has a column for the details of the nominee. You can specify or change the nomination on the mutual fund folio, by filling the column. A Nomination can be made by anyone who holds the mutual fund folio account, either singly or jointly. You will have the option to make three nominees for your mutual fund portfolio. If you choose 3 nominees, you must specify what percentage of the investment goes to which nominee. If you do not mention the percentage, the amount will be distributed equally among all nominees.

Benefits of making a nomination for a mutual fund

If a nomination is made for a mutual fund, the funds can be easily transferred to the nominee. If something happens to the investor and the nomination is not made, it will be difficult for heirs to claim the mutual fund investment. They have to submit documents such as WILL and a "No Objection Certificate (NOC)" from other heirs to get the mutual fund investments transferred to their name.

You may also read: How To Invest In Mutual Funds For 2018-19?

How to settle death claim in mutual fund investments?

On the death of the mutual fund investor, the nominee can either redeem the mutual units or transfer them in his name. To do this, the nominee has to make a request through a letter and the format of the letter will be specified by the fund house.  Along with the request letter, the nominee has to submit the following documents:

  • Death certificate of the deceased mutual fund investor.
  • Bank account details of the nominee which are attested by a bank manager.
  • The cancelled cheque bearing nominee's name.
  • KYC which shows PAN and the name of the nominee.

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