Over the last one year, there has been a rise in investors’ queries on nomination and transfer of MF units of deceased unitholders to nominees/legal heirs. To help you address these questions right, Cafemutual has listed down a few questions that investors frequently ask.
Q1: What are the things to keep in mind to before appointing a nominee?
A nominee is entitled to receive assets in case of the demise of an investor. However, a nominee is not the owner but a trustee who is legally bound to transfer the assets to legal heirs.
Mumbai RIA Kalpesh Ashar of Full Circle Financial Planners and Advisors spoke about 3 key things for MFDs/advisors to share with their clients:
- It is advisable to appoint legal heirs as nominees to avoid any probability of future disputes. Further, investors must mention the same beneficiaries in their Will as well as in nominations, as discrepancies could lead to legal disputes
- Nominee details like name, address, birth date and relationship with unit holder must be correctly filled and should align with nominee’s KYC documents
- Investors can also consider investing jointly (anyone or survivor mode) which can aid an easy transmission in the case of demise of one of the account holders subject to fulfilment of procedural formalities
Q2: How is a nomination filed?
Advisors should ask their clients to file a nomination at the time of investing by filling up a ‘Nomination’ section. However, where investors have not appointed a nominee, they can fill up a separate nomination form either online or physically.
Kolkata MFD Jitu Dhabaria of Balaji WealthCare said that he encourages his clients to appoint more than one nominee to avoid legal disputes within the family.
Currently, investors can add up to three nominees and they must state the percentage share of each. If the share is not mentioned, every nominee is eligible for an equal share. Where the nominee is a minor, a guardian must be appointed.
Q3: Where are the nomination details seen?
Investors can check nomination details on the account statement. According to Jitu, registered nominations require a revision post certain events like demise of a nominee, change of name on nominated daughter post marriage, etc.
Q4: How can a nominee claim the units?
Transmission of units can arise under four scenarios.
- Transfer to the surviving joint holders
- The demise of the sole owner or all owners and the nomination is registered
- The demise of the sole owner or all owners and the nomination is not registered
- The demise of the Karta of a HUF
Request for transmission, death certificate of unit holder, KYC and bank details are the basic details that a nominee/legal heir/surviving unit holders/HUF & new Karta must submit. In the case of a minor, the KYC of the guardian must also be submitted.
However, each scenario seeks additional documents case to case basis. The list can be viewed on Amfi’s website.
Q5: What if something unfortunate happens to the nominee?
Nominations can be changed multiple times. Investors can appoint another nominee after demise of the deceased nominee.
If both unitholder and nominee die then legal heirs of deceased unit holders are entitled to get MF units.
Kalpesh shares it is better to have a will that states the final outcome in such scenarios. In the absence of a will, this gives rise to intestate succession and the claimant will have to seek legal advice for availing a succession certificate. Intestate means a person passes away without making a will.
