Personal Finance

The key to your nomination benefits

Nalinakanthi V | Updated on January 24, 2018 Published on June 21, 2015

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A nominee in mutual fund schemes? This is how you should go about the claims process



You diligently put away money into mutual funds towards your many goals — your children’s education and marriage, your own retirement, buying a house and so on.

But in the unfortunate event that you pass away, what happens to these investments? To ensure that your wealth is smoothly passed on without much hassle, it’s imperative that you register nominees to all your mutual fund folios.

So, how do you go about registering your nominee? And if you have been named a nominee, how can you transfer the units into your name on the death of the investor? Here’s how.

Registration

Let’s start with registration of nominees. Now, every new folio or account opened, especially those with sole holding, must necessarily have a nominee. If you don’t want to make one, you need to expressly agree to that. There’s a form for this purpose — your application may even be rejected if you don’t fill this out!

You can register up to three individuals as nominees per folio, usually at the time of making an investment. If you are registering multiple nominees, you will need to clearly specify the percentage of units each nominee will receive. If you don’t mention this, units will be split equally.

What if you haven’t got around to making nominations for older folios yet? Don’t fret. You can register or even change a nominee at any time. Individual fund houses have nomination forms, downloadable from their websites.

If you hold units in demat form, the nomination details you provided to the depository participant will be applicable.

Claim process

If you have been named a nominee and you need to get the units transferred, the documentation and process depend on the account holding.

If the deceased individual is the sole holder of the units, the nominee will have to approach the fund house and file a transmission request form with a set of supporting documents. First, the original death certificate of the deceased unit holder, or a photocopy of the same attested by either a notary or a gazetted officer or a bank official along with the seal of the institution. Second, your own bank account details as you will now be the new first holder, in the specified format duly attested by the branch manager.

Alternatively, you can submit your bank account statement or a cancelled cheque bearing the account details and name. Your signature will have to be verified by the authorised official of the bank along with the bank seal.

You will also have to be KYC (Know Your Customer) compliant and submit a copy of the KYC acknowledgement. Finally, you may have to furnish an indemnity bond in case the value of the investment is higher than a threshold limit; the limit may vary across fund houses.

But if the units are jointly held by the deceased investor, then the joint unit holder becomes the first holder.

Even so, the transmission requisition letter should be submitted, in order to become the first holder. Supporting documents, such as death certificate, bank account details of the new first holder in the prescribed format duly attested by the bank manager and KYC acknowledgement need to be submitted as well. The nominee continues to remain a nominee.

Absent nomination

If the nominee is not registered by the deceased unit holder, then the transmission process may take longer and involve more documentation.

If the deceased investor was the sole unit holder, then besides the standard transmission requisition, KYC acknowledgement, bank account details and death certificate, the legal heir will have to submit an indemnity bond and individual affidavit in the format prescribed by the fund house.

In case the transmission amount is less than the threshold limit, the nominee may just have to submit documentary proof substantiating his/her relationship with the deceased.

If the transmission amount exceeds the threshold, one may have to additionally submit any of these documents — notarised copy of probated will, legal heir certificate/succession certificate/claimant issued by a competent court and letter of administration in case the deceased investor does not have a will in place.

In the event of death of the sole/all the holders, the nominee is responsible for claiming the proceeds of the investment and transferring the same to the legal heirs of the sole/joint holders.

Published on June 21, 2015
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