What is a nominee and who should you choose as your nominee

Death is inevitable.

But unfortunately very few of us think about it (apart from when buying a Life Insurance policy) or accept that it could happen to us anytime.

After your death, if there is no nominee, the process of claiming investments can be a draining exercise for your family involving lengthy proceedings as per applicable succession laws and in accordance with your will, if any.

Nomination is a simpler and inexpensive way to make things easy for one’s near and dear ones to claim the units/money in your mutual fund folios, demat account or bank account expeditiously, through minimal paper work after one’s death.

What is nomination and is it the same as a will?

Though frequently mixed up, nomination is not the same as will.

Nomination means appointing a person to be a trustee and an agent of your investments in case of your death.

It does not mean that you have willed the money to your nominee after your death.

After your death, the nominee is just supposed to get the units from the Mutual Fund (thus completing the obligations and formalities at the Mutual Fund's end) and then distribute it amongst the beneficiaries according to your will.

Even if you don't have a will, the units/money shall still be legally required to be distributed amongst your legal heirs only (and not your nominee per se) as per prevalent succession laws.

Nomination in Mutual Funds

Nomination in Mutual Funds is done at a folio level.

Assigning a nominee can be done initially while making the first investment in a folio or can also be done at a later stage.

One can add upto 3 nominees for your Mutual fund investments. In case of multiple nominees, you also need to assign the percentage in which the units will be shared amongst them.

Who can be a nominee?

Since nomination and will are different things and a nominee is just a temporary care-taker of your money, he/she need not be a legal heir.

It can be any individual who you trust (e.g. your parents, spouse, sibling, children or even a friend or a distant relative) to carry out your wishes as expressed in your will.

You can also nominate a minor (e.g. a minor child), but in that case, the minor has to be appointed a guardian and both their details have to be mentioned in the nomination form.

Can I cancel a nomination or change the nominee?

Yes, you can! A nominee change or cancellation can be done at any time during the lifetime of your investment. They can also be changed any number of times.

It is also advisable to review the nominee periodically as initially you may appoint your parents as a nominee. After their death, you may want to appoint your spouse or kids as nominee.

To conclude, appointing a nominee for your investments is a small step that can ensure your family gets the custody of your investments without any hassles, and can ensure the security of your loved ones in a big way.

Rings a bell? Share your nominee details with us on care@goalwise.com and we’ll do the rest for you :)