Who should inherit your wealth? Because money matters! Understand the importance of Nomination

We have all read those stories of the great desire of kings and their suitable heirs in history and story books. Just as kings entrusted their kingdom to the rightful heir, a legally enforceable will suggests naming an heir for each of your assets.

Most people do not make a will or nominate people in their bank accounts, investments etc. during their lifetime. This can make it controversial as to who will inherit that person’s property after his death. This is where nomination becomes important.

In the case of mutual funds, ‘Nomination’ is a kind of facility that fund houses provide to the investor. With the help of this, the unitholder (investor of the Mutual Funds Investment Plan) can ‘nominate’ a person. In case of the untimely death of the unitholder, the nominee can redeem the units of the scheme.

Who can become a nominee? In case of Mutual Funds

Any person can become a nominee. These include a family member, friend, or trusted person. Even you can make a minor as a nominee.

However, in this situation, the control of mutual funds remains with the guardian till the minor attains the age of 18 years.

Investors can choose to have more than one nominee in a Mutual Fund Investment. The units can be shared in different proportions. Let’s say that you want to give a bigger share to a particular nominee, then you can mention it.

What are the benefits of making a nomination?

On the registration of the nomination, in the event of the death of the investor, the money is easily transferred to the nominee.

However, if the nominee is not declared, the legal heir has to produce all kinds of documents. These include Will, Certificate of Succession, No Objection Certificate, etc. Only after this, the units are transferred in his name.

Can the nomination be changed?

Nominees can be added or removed at any time by the person who is declaring a nominee. Investors can do this work anytime they wish.

Nomination is a facility that enables an investor to nominate a person who can claim mutual fund investment units or redemption from these units in the event of the death of the investor.

If an investor does not specify the name of a nominee in his account, then the investment can be claimed by the legal heir of the investor only after legally proving the validity which can be a lengthy process.

Therefore, it is preferable to have a nominee in all your mutual fund investments to enable the smooth transfer of assets in the event of something unfortunate.

In case there is more than one nominee in an account, you must specify the percentage allocation of your investments among all the nominees. Update all your mutual fund investment accounts with nominee details and save your family the hassle of proving your legal heir to claim your investments in case of an unfortunate event.

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