Nomination: If the nominee is not fixed, the claim process can be lengthy – papers such as a will, NOC for unit transfer may have to be shown.
The first step of mutual fund investment is to set your goals and identify risk. Small and big family goals – children’s education, marriage, home-car dream. But if your family is not able to take advantage of this investment if you are not there, then all the planning will be lost to the money and your family will have to go through a long and difficult process to get their own money. That is why nomination is important. Like every asset, the units of the mutual fund will go after the death of the investor, to whom it is a nomination. This nomination should be given to you only at the beginning of your investment. Now nomination is mandatory on opening of all new folios, but it is not necessary if joint holding is held.
You can also change this nomination in future whenever you want.
You can make a partner, child, friend or any trusted person in your family your nominee. The transfer of the unit can be done easily after the death of the investor if the nominee is pre-decided. If the nominee is not fixed, the claim process can be lengthy – papers such as a will, no-objection certificate may have to be shown for the unit transfer.
What are the rules of nomination
The unit is allotted only after the death of the investor to the nominee. If there was an investment in a joint holding, the fund is transferred to the nominee only on the death of both the holders. If more than one nominee has been fixed in the fund, then all the funds are transferred in the ratio fixed by the investor. If the investor has not decided these ratios, then all the units are transferred equally.
If the nominee dies before the death of the unit-holder i.e. the investor, then this nomination is automatically canceled. At the same time, if one nominee has died after having multiple nominees, then his share also gets divided into others.
Which papers will be required?
Transfer request form (Form T3) to the nominee for fund transfer, death certificate of the deceased, PAN card information, KYC form, bank information – such as passbook, canceled check etc. If the nominee is not yet reached the age of 18, then the PAN information of his guardian will have to be given. Also, to prove the age of the nominee, a birth certificate will have to be shown.
Nomination: The bank manager can attest the signature of the nominee on a transfer of up to 2 lakh rupees, but if the amount is more than this, the notary public or magistrate will have to be certified.
Keep in mind that when you are making someone a nominee, please give them information. In the absence of information, the nominee can also miss the claim.
How is the transfer due to the absence of a nominee?
If the investor has not decided the nominee, then this fund is transferred to whoever is the heir. For this, will papers are required. If the will is not written, then according to the succession law, whoever will inherit this investment can get it transferred in his name. In such a situation, heirs will have to take a no-objection certificate from other family members and transfer the indemnity bond on transfer of up to Rs 2 lakh.
Also, if the investor has made someone else heir to his property, then the nominee can be the only caretaker of this fund. The right to this investment will be with the heir.
