Jun 28, 2022
Nomination ensures that investments are transferred to a nominee without much difficulty. At the time of making an investment, it is crucial to register the nomination especially if it is held in a single name otherwise it becomes very cumbersome for legal heirs to access the investment.
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Nomination can be indicated at the time of investment. Alternatively, the investor can fill up and submit the nomination form at a later stage as well. Most investments allow for multiple nominations, wherein the investor can indicate the percentage of the investment for each nominee.
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Only individual investors can make a nomination for their investment. On the contrary, a karta of an HUF or a power of attorney holder cannot nominate. Anyone can be appointed as a nominee -- any individual, family member, relative or a friend. In case of insurance policies, if the nominee is not a relative, the policyholder needs to prove insurable interest of the nominee.
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A minor can be nominated after providing his/her date of birth, and name and address of his/her legal guardian.
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Investors need to review their nominations periodically and register the change of nomination through an indemnity letter supported by guarantee of an independent surety. Along with that an affidavit made on stamp paper needs to be submitted. NOC from all legal heirs also needs to be furnished.
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Starting August 1, 2022, Sebi has made it compulsory for mutual fund unitholders to either register nominations or opt out of nomination.Nominees hold the investment proceeds in trust if the investment is disputed by legal heirs, pending final decision by the courts.Non-resident Indians can be made nominees subject to exchange control rules.Text provided by Centre for Investment Education and Learning.
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