SIMPLY 3 FINSERV PRIVATE LIMITED [CIN: U67190PB2022PTC056099] is an AMFI Registered Mutual Fund Distributors & SIF Distributor (ARN-249158)
Lokesh Malhotra [ARN-158405] | AMFI Registered Mutual Fund Distributor
When investing for your family's future, we often focus on returns, risk and time horizon. But there is another important question:
What happens to your investments if you are no longer around?
Nomination can help make the transmission of mutual fund investments more organised and easier for the family, subject to the applicable process.
Can a Minor Be a Mutual Fund Nominee?
Yes. A minor can be nominated.
Under the current nomination framework:
- Up to 3 nominees can be registered.
- A minor can be nominated.
- For a minor nominee, the Date of Birth is required.
- Guardian details are to be provided as prescribed in the nomination process.
- Nomination can be changed or cancelled as permitted under the applicable process.
- The prescribed transmission process and documentation need to be completed when the nomination is invoked.
Minor as Nominee ≠ Investment in Minor's Name
These are two different situations and should not be confused.
Minor as Nominee
The investor remains the unit holder. The minor is nominated to receive the investment, subject to the applicable transmission process.
Investment in Minor's Name
The minor is the sole holder, while the investment is held and operated by a parent or legal guardian, as applicable, until the minor attains majority.
Important
Nomination is not permitted in a folio held on behalf of a minor.
What If There Are Multiple Nominees?
An investor can nominate up to three nominees and may specify the percentage share for each nominee.
Where applicable percentages are not specified, the investment is generally apportioned equally among the nominees, subject to the applicable provisions.
Keep Your Nomination Updated
Nomination should not be treated as a one-time formality.
Review and update your nomination after major life events such as:
Marriage | Birth of a child | Death of a nominee or guardian | Changes in family circumstances
If the guardian of a minor nominee dies or needs to be changed, the relevant nominee/guardian details should be updated as applicable. A new natural guardian or court-appointed legal guardian may be required, along with the prescribed supporting documents.
Quick Checklist
✓ Check whether nomination is registered for your eligible folios.
✓ Ensure nominee details are accurate and updated.
✓ For a minor nominee, ensure Date of Birth and applicable guardian details are correctly provided.
✓ If there are multiple nominees, consider specifying their respective percentage shares.
✓ Review and update nomination after major life events.
Nomination ≠ Will
This is an important distinction.
Nomination facilitates transmission of the investment. It should not be treated as a substitute for a Will or succession planning.
In simple terms:
Nomination helps facilitate transmission.
A Will expresses succession intentions.
Investors with substantial or complex financial affairs may consider appropriate professional advice for succession and estate planning.
The Key Takeaway
Investing for your family is important. Making the transition of your investments simpler for them is equally important.
Review your nomination. Keep your details updated. And remember—nomination and succession planning are not the same thing.
Disclaimer: This content is for general investor education only and does not constitute investment, legal, tax or succession advice. Nomination and transmission are subject to applicable rules, procedures and other applicable laws. Investors should seek professional advice where appropriate.
Mutual fund Investments are subject to market risks. Read all scheme-related documents carefully. Investments in Specialized Investment Fund involves relatively higher risk including potential loss of capital, liquidity risk and market volatility. Please read all investment strategy related documents carefully before making the investment decision.
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