Investment Decision: A Comprehensive Guide on Mutual Fund Naming Practices
In the realm of mutual fund investments, it's essential to consider the unforeseen. One such consideration is the transmission of units to a nominee in the event of an investor's demise. This process, known as the transmission of units, is a crucial aspect of mutual fund investments that ensures a smooth transfer of assets to the designated beneficiary.
A mutual fund nomination refers to the act of appointing a person to take charge of your fund investments after your passing. This act provides financial security for your loved ones, ensuring that your investments are transferred to the nominee(s) without any complications.
Any individual can be appointed as a nominee, except for companies, body corporates, partnership firms, Hindu Undivided Families (HUF), societies, or non-religious or non-charitable trusts. Minors can also be nominated, but in such cases, the guardian's name and address must be provided.
If you wish to remove a nominee, you can request the asset management company for a nomination form. Similarly, you can change the nominee of your mutual fund using the mutual fund nominee change form at any time. It's advisable to revisit your nominations during major life events, such as marriage, divorce, or the loss of a loved one, to ensure they reflect your current preferences.
Non-resident Indians (NRIs) can also be added as mutual fund nominees, subject to exchange control rules. The nominee can be assigned at the time of purchase or for an existing investment by requesting the asset management company for a nomination form.
If the percentage share is not specified, the Mutual Fund units will be equally distributed among all the nominees mentioned in the nomination form.
In the digital age, updating a mutual fund nominee has become a straightforward process. To update a mutual fund nominee online, you typically log into your investment or mutual fund platform account, navigate to the nominee or profile section, edit the nominee details, and submit the update. Some platforms require an OTP or e-sign verification to authenticate the change.
For example, on Scripbox, the nominee update process includes logging into your account, going to Profile > Investments > Scripbox > Change under Nominee, editing and submitting the new nominee details, being redirected to the mutual fund company's central platform (e.g., MF Central) to update nominee details online, and having the changes updated in folios typically within 1 working day.
Similarly, on SBI Mutual Fund, you visit the SBI Mutual Fund online portal (sometimes without login), enter your PAN number, and provide the nominee details to update the nomination. For other platforms like Zerodha, Groww, Paytm Money, or registrars like CAMS and KFintech, the process is similar, involving logging in, locating the nominee or profile section, entering nominee and guardian details if applicable, and completing the process with OTP or Aadhaar e-sign for verification.
It's important to keep your nominee details up-to-date to avoid potential conflicts among your beneficiaries. Conflicts can be avoided by having a nomination in place. Additionally, you can nominate the Central Government, State Government, a local authority, any person designated by his/her office, or a religious or charitable trust as nominees.
In the event that you do not have a legal heir or any person mentioned in the will, a relative may claim the assets by filling and submitting form T3 (Transmission Request Form). You can add up to 3 nominees in one mutual fund folio and specify the percentage share that each nominee will receive in the event of your death.
In conclusion, mutual fund nomination is a vital aspect of mutual fund investments that ensures a smooth transfer of assets to your nominated beneficiary in the event of your demise. By following the simple online process, you can update your nominee details at any time, providing peace of mind for you and your loved ones.
Personal finance is significantly improved by investing in mutual funds for long-term growth, and the nomination of a beneficiary is a crucial step in securing your loved ones' financial future. In the event of your passing, your appointed nominee will receive the mutual fund units without any complications, making the transmission of assets seamless.
