TL;DR
Adding nominees to your mutual funds ensures a smooth transfer of assets to your intended beneficiary, simplifies the claims process, and helps avoid legal complications. Nominees can be added online through platforms like MF Central, MF Utilities, Groww, Zerodha, and INDmoney, or offline by submitting a nomination form to the AMC. Make sure to have necessary documents ready, and remember that a nominee acts as a custodian, not the legal owner. Adding nominees to your mutual funds helps secure your investments for your loved ones with minimal hassle.
What is a Mutual Fund Nominee?
A mutual fund nominee is a person chosen to receive an investor’s mutual fund investments in the event of the investor’s death. The nominee’s role is to ensure a smooth transfer of these investments to a designated individual, avoiding legal hurdles.
Importance of Adding Nominees to your Mutual Funds
Adding nominees is an essential step in managing your mutual fund investments. This designation simplifies the claims process, reduces potential disputes, and ensures that assets are transferred to the intended person efficiently. The Securities and Exchange Board of India (SEBI) had mandated that all investors must declare a nominee for their mutual funds or explicitly opt out by June 30, 2024, with non-compliance potentially resulting in account freezing.
Process of Adding Nominees to your Mutual Funds
Online Methods
MF Central
MF Central, a platform serving mutual funds managed by CAMS and KFintech, provides a streamlined process for adding a nominee. To add a nominee, log into MF Central, locate the “Nomination” section in your profile, and follow the on-screen instructions to provide the nominee’s details.
MF Utilities
For mutual funds not managed by CAMS or KFintech, MF Utilities offers an online process. Users can log in, navigate to the “Nomination” section, and enter nominee information directly.
Platform-Specific Processes
Groww: If you invest in mutual funds through Groww, follow these steps:
- Go to your profile and select ‘Account details.’
- Click on ‘Declare Nominee’ next to your nominee details.
- Click ‘Add Nominee.’
- Enter the nominee’s details and click ‘Confirm.’
- Complete the e-sign process.
Note: If you have an existing nominee and want to change it, you’ll need to fill out a physical form and contact customer support.
Zerodha (Coin): To add a nominee via Zerodha’s Coin platform, the process is as follows:
- Log in to console.zerodha.com.
- Click on Account and select Nominees.
- Click Add nominee (up to 3 nominees can be added).
- Enter the nominee details, specifying the percentage share for each (if multiple nominees are added). For a single nominee, enter 100%.
- Click on Continue, agree to the Terms and Conditions, and click Proceed.
- Click Sign now, enter the Aadhaar number, and select Send OTP.
- Enter the OTP and verify it.
Additional Notes:
- If your mobile number is not linked to Aadhaar, you will need to follow the offline nomination process.
- Nominees must have names matching their documents.
- Non-individual accounts cannot have a nominee.
- If the nominee is a minor, guardian details are required, but the account holder cannot be the guardian.
INDmoney: INDmoney allows you to manage nominees for your entire mutual fund portfolio easily. The process is as follows:
- Open the INDmoney app and go to the Nominee Center in your profile.
- Tap on Mutual Funds a/c and sync your portfolio.
- Check for funds where nomination is pending.
- Add nominee details (up to 3 nominees can be added).
- View all added nominees in the Nominee Center.
Offline Method
Adding a nominee offline requires filling out a nomination form from your Asset Management Company (AMC). Submit the completed form along with the required documents to the AMC office. This method may take a few days, as the form must be processed and updated by the AMC.
Requirements and Considerations for Adding Nominees
Documents Required
The nomination process usually requires a few key documents. These include:
- A copy of the nominee’s PAN card
- The investor’s PAN card copy
- A passport-sized photograph of the nominee
- A canceled cheque or bank statement from the nominee’s bank account
Nominee Eligibility
Most individuals can be nominated for mutual fund accounts. However, certain entities, such as some types of trusts and companies, cannot be nominated. If the nominee is a minor, the guardian’s information must also be provided.
Multiple Nominees and Allocation
Investors have the option to nominate multiple people. Each nominee can be assigned a percentage share of the mutual fund investment, which is specified during the nomination process.
Changing or Revoking Nominations
Investors can change or cancel a nomination anytime. To modify or revoke an existing nomination, submit an updated nomination form either online or offline through the AMC or investment platform.
What Happens in the Absence of a Nomination?
If no nominee is designated, mutual fund assets go to the investor’s legal heirs. However, without a nominee, the transfer process can be complicated. Legal heirs may need to go through formal procedures, like obtaining a probate of the will or a succession certificate, both of which can be time-consuming and costly.
Common Misconceptions
Nominee as Owner
A nominee is not automatically the legal owner of the assets. The nominee’s role is primarily to act as a custodian who facilitates the transfer of assets. Legal ownership is determined by other documents, such as a will.
Will vs. Nomination
While a will applies to all assets an individual owns, a nomination is specific to mutual fund investments. In the absence of a nominee, the will dictates the distribution of mutual fund assets.
Joint Holders
Many investors assume that joint holders are also automatic nominees. This is incorrect; a separate nomination process is required for mutual funds held jointly.
Benefits of Adding a Nominee
Adding a nominee can significantly simplify the settlement process. It helps reduce family disputes over asset ownership and avoids the legal complications often associated with distributing assets. Nominations also offer peace of mind, ensuring that loved ones receive the financial support intended for them without complications.
Conclusion
Adding a nominee to your mutual fund holdings is a straightforward yet essential step. It offers clarity, security, and assurance that your investments will benefit the intended person. With SEBI’s deadline approaching, make this quick update to protect your mutual fund investments and streamline the process for your beneficiaries.
EZIT Guardian: Your Partner in Securing Your Family's Financial Well-being
Start your 90-day free trial with EZIT Guardian today and take the first step towards securing your family’s financial future. Download the EZIT Guardian app from the Google Play Store & App Store today to schedule a consultation and take the first step to start securing your legacy.
