Nomination in Mutual Funds

What is it?

Nomination is the process of designating one or more people (nominees) who will receive your mutual fund units in the event of your death, simplifying the transfer process for your family. It's a separate step from writing a will, though both relate to how your assets are passed on, and SEBI mandates investors either provide a nomination or explicitly opt out when investing.

Why should you care?

Without a valid nomination, your family may need to go through a longer, more document-intensive legal process (such as obtaining a succession certificate or probate) to claim your mutual fund units after your death — nomination significantly simplifies this for the people you care about, at essentially no cost or ongoing effort on your part.

Real-life example

An investor sets up nomination for their spouse when opening a mutual fund folio, specifying what percentage of the holdings the nominee receives if there are multiple nominees. Years later, if the investor passes away, the nominee can claim the units by submitting a death certificate and identity proof to the AMC or registrar — a comparatively simple process — rather than the family needing to navigate a lengthier legal claim process that would be required without a nomination on file.

Common mistakes

• Never setting up a nomination, or explicitly opting out without realising the implications, leaving no simplified path for the family to claim the investment.
• Setting up a nomination once and never updating it after major life changes (marriage, divorce, birth of a child), leaving an outdated nominee on record.
• Assuming a nominee automatically becomes the legal owner of the units — a nominee is typically a trustee who receives the units to pass them on per the investor's will or succession law, not necessarily the final beneficial owner if a will states otherwise.

FAQ