When it comes to growing wealth through mutual funds, most investors focus on selecting the right scheme, tracking performance, and aligning investments with their financial goals. Whether you work with a finance advisor, manage it yourself, or use an online platform, one critical detail often gets overlooked—nomination.
Think of it as the safety net for your investments. No matter how well your mutual funds perform, failing to add a nominee can create unnecessary legal complications for your loved ones in your absence. Thankfully, with today’s seamless digital platforms, adding a nominee to your mutual fund investments is quick, easy, and can be done entirely online.
In this blog, we’ll explore why nomination is a vital part of financial planning, how to add a nominee online, the steps involved, things to keep in mind, and how Fincart can help you safeguard your investments and secure your family’s future.
What Is a Nominee in Mutual Funds?
A nominee is the person you designate to receive the proceeds of your mutual fund investment in the event of your demise. The nomination facility ensures a smooth and quick transfer of your assets without going through lengthy legal procedures such as probate or succession certificates.
The nominee can be:
- A family member (spouse, parent, child)
- A relative
- Even a trusted friend or guardian
Nomination doesn’t give ownership rights to the nominee while you’re alive. It only enables them to claim the amount if something happens to you.
Why Is Nomination Important?
If you’ve been investing through platforms like Fincart or directly with Asset Management Companies (AMCs), you must understand the importance of adding a nominee to your mutual funds.
Here’s why:
- Ensures Financial Security for Dependents
Nomination helps ensure that your investments reach the right person—typically your family—without any delays or complications.
- Avoids Legal Complications
In the absence of a nominee, legal heirs must go through legal documentation, often involving succession certificates and other paperwork. This delays access to the funds and can be emotionally and financially draining.
- Hassle-Free Transmission
Once a nominee is registered, the process of transferring mutual fund units after the investor’s demise is far more streamlined. It prevents disputes among family members.
- Mandatory as per SEBI
As per SEBI guidelines effective from October 1, 2023, it is mandatory to either add a nominee or opt-out of nomination. Investors who fail to do either face restrictions on new investments.
What Happens If You Don’t Add a Nominee?
Many investors unknowingly skip the nomination step, assuming it’s optional or can be done later. However, not adding a nominee can create unnecessary emotional and financial stress for your loved ones during an already difficult time. In the absence of a nominee, mutual fund units don’t automatically pass on to your intended beneficiary—they become part of your legal estate.
Here’s what that could mean for your family:
- Lengthy Claim Process: Your legal heirs will be required to submit multiple documents—such as a death certificate, succession certificate, indemnity bond, and possibly even a probate of will.
- Delayed Access to Funds: Without a nominee, the claim process can take several months, leaving your family without timely access to money they may urgently need.
- Legal Complexity: In cases where there is no will or multiple heirs are involved, the process can turn into a legal battle, potentially souring relationships.
- Emotional Burden: During a period of grief, your family may have to deal with complex paperwork and legal formalities just to claim what is rightfully theirs.
By simply adding a nominee, you offer your family clarity, security, and peace of mind. It’s a small action today that can make a significant difference tomorrow.
Can You Add Multiple Nominees?
Yes, you can! Most mutual fund platforms allow you to nominate up to three individuals for a single folio. You’ll also have the flexibility to define the percentage share for each nominee. This is particularly useful if you wish to distribute your investments among more than one family member or legal heir. Keep in mind, though, that if no percentage is defined, the investment is typically divided equally among the nominees.
When Should You Nominate?
Ideally, you should add a nominee when you first invest. However, if you’ve missed it, don’t worry. You can do it online at any time using either your mutual fund platform or the AMC’s website. A certified investment planner or mutual fund distributor can also assist with this.
If you’ve invested through Fincart, you can contact our experts to guide you through the nomination process seamlessly.
How to Add Nominee in Mutual Funds Online – Step-by-Step Guide
Let’s break it down by the two most common methods:
Method 1: Through the AMC Website (If You Invest Directly)
Most AMCs have made it extremely simple to add or update nominees in mutual funds online via their online portals. Here’s how:
Step-by-Step Process
- Visit the AMC’s Official Website
Log in to your investor account using your PAN and password or OTP. - Go to the Nominee Section
Look for ‘My Profile’ or ‘Update Details’. Click on ‘Add/Edit Nominee’. - Fill in Nominee Details
You will need:- Nominee’s full name
- Date of birth (if a minor)
- Relationship
- Address
- Contact number
- Add Guardian Details (If the nominee is a minor)
You must provide the guardian’s name, relationship, and contact information. - e-Sign the Request
Use Aadhaar-based OTP or eSign through Digilocker to complete the process. - Confirmation
Once submitted, you will receive confirmation for the mutual fund nominee via SMS/email from the AMC.
Method 2: Through a Mutual Fund Platform
If you’ve invested through platforms like Fincart, CAMS, or KFintech, you can update nominee details across multiple AMCs in one go.
Here’s how to update nominee in mutual fund online on a common platform:
- Log in to Your Platform Account
Go to the mutual fund transaction platforms. - Navigate to ‘Nominee Update’ Section
These platforms usually allow you to update nominee details across all your mutual fund folios. - Select Folios for Nomination
Choose all the folios where you want to add the nominee. - Enter Nominee and Guardian Details
Fill in the required details as you would on the AMC website. - Authenticate Using Aadhaar OTP
Complete the process using Aadhaar-based OTP or digital signature. - Track Status
You can track the status of your nomination request on the dashboard or via email alerts.
What Documents Are Required?
In most cases, adding a nominee online is paperless if done through Aadhaar-based eKYC. However, in certain cases, you may be asked for:
- PAN of the nominee (optional)
- Aadhaar number for OTP authentication
- Photo ID (if done offline)
- Guardian’s ID proof (if nominee is a minor)
How Many Nominees Can You Add?
You can add up to three nominees per folio. You also have the option to assign a percentage share of the investment to each nominee. For example:
- Nominee 1 – 50%
- Nominee 2 – 30%
- Nominee 3 – 20%
If no percentage is mentioned, the investment is distributed equally among the nominees.
Can You Change or Remove a Nominee?
Absolutely. You can:
- Change the nominee by submitting a fresh request
- Remove an existing nominee
- Update nominee’s details (in case of marriage, death, etc.)
This can be done online or offline, but e-signing the request is mandatory for validation. You can even consult a tax planner or investment advisor for guidance on estate planning and nominee allocations.
What Happens If You Don’t Add a Nominee?
Not adding a nominee might not seem like a big deal now, but it could cause significant problems for your family later. If you pass away without a nominee:
- Your heirs must produce legal documents like a succession certificate
- The process is time-consuming and may take months
- There could be disputes if multiple heirs are involved
- Your family may lose access to the investment during a financially stressful time
Why take such a risk? Adding a nominee is quick, free, and mandatory.
Fincart’s Role in Your Investment Journey
At Fincart, we help you do more than just invest. We help you plan for your life goals securely and smartly. Our experts are here to guide you through every step—from selecting mutual funds to making sure your nominations are updated and valid.
Our platform is:
- Easy to use
- SEBI-compliant
- Backed by qualified financial advisors and financial consultant support
Whether you are new to mutual funds or a seasoned investor, nominating your loved ones is a key part of smart portfolio management services and investment planning.
Final Thoughts: Don’t Delay, Nominate Today!
Adding a nominee to your mutual fund is more than just a checkbox. It’s a declaration of care and responsibility. It ensures that your hard-earned money benefits your family without legal stress or delays.
With online facilities, it takes less than 10 minutes to complete. Don’t wait till the last minute or leave your investments hanging in uncertainty.
Log in to your Fincart account, go to the nomination section, and make sure your legacy is secure.
