Investing In Mutual Funds? Here’s How & Why You Should Add A Nominee Before September 30
Rs 1.55 lakh crore - that's how much India invested in mutual funds through SIPs in the recently concluded financial year 2022-23. As recently as March 2023, SIP inflows hit an all-time high of Rs 14,276 crore.
This in itself shows how much the popularity of mutual funds has been rising in India in recent years. But with investment, comes responsibility.
While it is indeed important to choose the right mutual funds as per your risk appetite, financial goals and investment horizon, another task that is equally important, is to add nominee(s).
Last month, the last date to add a nominee was extended to September 30, 2023, for mutual fund investors. By this deadline, investors would have to either compulsorily assign a nominee or fill out a declaration form to opt out of nomination (i.e. they don't want to have any nominee for their mutual fund investments). This is applicable irrespective of whether the investment is held individually or jointly.
What Is Nomination In Mutual Funds?
According to AMFI, a nomination is a facility that enables an individual unitholder (including the sole proprietor of sole proprietary concern) to nominate a person who can claim the units held by the unitholder or the redemption proceeds thereof in the event of death of the unitholder.
If the units are held jointly by more than one person, all joint unit holders are required to together nominate a person in whom all the rights in the units would vest in the event of the death of all the joint unit holders.
Why It's Important To Add Nominee(s)
Life's uncertainty is enough to understand the importance of adding a nominee. Nomination is a simple and inexpensive way to make things easy for your near and dear ones to claim the money in your mutual fund portfolio, demat account or bank account through minimal paper and stress, in case of your unfortunate demise.
Remember, if you, as an investor, don’t specify a nominee or choose to opt out of nomination, the investments can only be claimed by the legal heir(s) of the investor after proving their legal heirship. This, however, can be a long-run process. Hence, it is advisable to have nominee/s in all your mutual fund investments to enable a smooth transfer of assets in case of an unfortunate event.
So, without delaying it further, go get all your mutual fund investment accounts updated with nominee details and save your family from the hassle of proving their legal heirship to claim your investments in case of an unfortunate event.
How To Add Nominee To Your Mutual Fund Investments?
As per the website 'Mutual Funds Sahi Hai', which is an investor education initiative powered by AMFI, you can add or update the nominees in your mutual fund holding by submitting a physical request at the nearest AMC/RTA branch. Alternatively, it can also be done online on the AMC/RTA website or on mfcentral.com. Login to your account and choose the folio under which you want to add/update nominees. Fill in the nominee details like name and address along with the percentage of ownership each nominee will get. If no percentage is specified, each nominee will be eligible for an equal percentage. You will then receive an OTP as part of the two-factor authentication to verify the nominee updation request. Alternatively, the digital form can be signed using the e-Sign facility.
If you are not comfortable online, you can visit the nearest branch or Investor Service Center, of the Fund House to add/update nominee details in your folio. All you need to do is submit a written application or fill up the relevant section of the Common Application Form. You will need to specify the account/folio where you need to add/update nominees and the names of the nominees. In case of more than one nominee in an account/folio, you need to specify the percentage allocation of your investments between all the nominees. Also, in case of joint holding, all the unit holders will have to sign the form with their wet signatures.
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