How To Add A Nominee To Your Mutual Fund Investment?

The best thing one can do in a world full of uncertainties is to always be ready for the unexpected. And this can be achieved by organising your finances.

Services related to mutual funds have been available for a while now. Besides, it is the preferred investment choice for millions of Indians.

Investor nominations for mutual fund holdings have long been welcomed by the Indian mutual fund sector. The Securities & Exchange Board of India, which oversees the capital markets, made it mandatory for MF investors with active folios including those held jointly this month to either nominate someone or choose not to do so. On October 1, 2022, the regulation came into force for new folios. Existing folio investors who break this rule will have their investments frozen and won't be able to make any changes to them. The last date to nominate a candidate will be March 31, 2023.

So, if you still haven’t nominated someone in your mutual fund investment, then here’s how you can add a nominee:

You can choose and add a nominee at the time of purchase. On the application form, in the part designated for the nomination feature, you can simply add the name and personal information of the candidate you wish to nominate. You can also ask the AMC (asset management company) for a nomination form if you want to name a person for an existing investment. Then use the common nomination form for mutual funds given by the AMC to add a nominee of your choice for your mutual fund investments. You can do so by –

1. Filling out the nomination form correctly

2. Adding the nominee’s name and date of birth

3. Including the nominee’s connection to the investor

4. Correct address of the nominee

5. Fractional share of each nominee if there are many    

6. Signing on the form wherever necessary

7. Handing it over to the MF company and transfer agency (RTA).

If you happen to have an online investment account, take a look at your mutual fund statement. Then verify your folios to check if they have been nominated. The remaining steps can be finished with two-factor authentication.

Please note: You can add up to three nominations in a single mutual fund folio and can also define the percentage stake that each nominee will get in the case of your death. Your mutual fund shares will be evenly divided among all the nominees listed on the nomination form if you do not designate a percentage share.

A nominee can be a friend, a minor, or a member of the investor's family. If the candidate is a minor, the name and address of the applicant's guardian must be provided. Even an NRI is eligible to serve as a nominee, according to the current exchange control regulations.

You can either seek information from the relevant AMC or simply check the nominee of your mutual fund online. Plus, after any significant life event, such as a marriage, separation, the death of a loved one, etc., it is advised to review your nominations. Even though some of these instances may seem overwhelming, it is crucial to keep your nominations updated.

A mutual fund nomination form, much like a will, is crucial to achieving your financial goals. When life gets busy, many of us forget to add a nominee. And sometimes, we even put off updating the nominee. By designating a nominee, you can make sure that your assets are transferred to your rightful heirs. Therefore, make sure to add nominations if you have ever invested in mutual funds or intend to do so in the future.