Mutual Funds

Don’t forget to nominate

| Updated on October 19, 2013

Sorting out the paperwork. P. V. Sivakumar

Your family’s comfort is of paramount importance to you. You have been diligently investing in mutual funds to cater to their future needs. But have you done the right paperwork to ensure that your family has access to your investments with ease, in case of an unfortunate event?

Nomination is both your right and responsibility. It ensures your investments reach your nominees easily. An investor can nominate a person, i.e. a nominee, to whom his/her mutual fund units will be transferred on his/her demise.

A nomination may be registered at the time of purchasing units. The application form has a provision for this that must be filled in. In fact, investors are asked to specifically indicate if they do not wish to nominate. If an investor has not registered a nomination at the time of application, he/she may register a nomination later. Forms are available at the mutual fund/registrar’s websites.

Multiple nominations are possible in a folio; minors too can be nominees. An investor may make up to three nominations for a folio and even specify the percentage of units that will go to the nominees.

A nomination can be changed at any time and even cancelled. Details are available on the website.

Nominations can be made only by individuals applying for or holding units on their own behalf singly or jointly.

Societies, trusts, bodies corporate, partnership firms, karta (or patriarch) of HUF (Hindu undivided family), holders of power of attorney (POA) cannot make a nomination.

A nomination can be made in favour of individuals, including minors, the Central government, State government, a local authority, any person designated by virtue of office, or a religious or charitable trust. A non-resident Indian can be a nominee subject to the exchange control regulations in force from time to time.

Transferring units

On the demise of the investor, the following documents would need to be submitted to effect the transmission of units in favour of the nominee:

A letter from the nominee claimant to the fund or registrar requesting for transmission of units. A format of the letter is available with the registrar and at the website.

Death certificate in original or a photocopy notarised/attested by a gazetted officer or bank manager.

Bank account details of the new first unit holder, i.e. the nominee, along with attestation by the bank manager or a cancelled cheque bearing the account details and account-holder’s name.

KYC verification proof of the nominee(s).

Indemnity bond, if the transmission amount is Rs 1 lakh or more, signed and executed by the nominee. The format is generally downloadable from the website.

The documents required are prescribed by the respective Asset Management Company and may vary marginally.

Registering a nomination facilitates easy transfer of funds to the nominee on the demise of the investor. In the absence of the nominee, a claimant would have to produce a host of documents, such as a will, legal heirship certificate, no objection certificate from other legal heirs, letter of administration/succession certificate, indemnity bond, and so on to get the units transferred.

units transferred.

Don’t forget to nominate

(Contributed by CAMS Viveka, an investor education initiative from CAMS. The views

expressed are general practices in the MF industry and may vary on a case to case


Published on October 19, 2013

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