Nomination, Transmission and Gifting in Mutual Funds

In the burgeoning mutual fund landscape, with assets under management surpassing Rs 70 lakh crore by the end of 2025, (Source: https://economictimes.indiatimes.com/mf/mf-news/mutual-fund-aum-set-to-surpass-rs-300-trillion-by-2035-icra-analytics/articleshow/126187642.cms) investors often focus on returns and SIPs but neglect a vital safeguard- nomination and transmission. These SEBI-mandated processes ensure your hard-earned investments reach your family seamlessly upon the unfortunate event of your demise, averting disputes, legal delays, and emotional distress. This blog unpacks nomination's role, transmission mechanics, gifting, and why pairing them with a will is non-negotiable for rightful ownership and family peace.

What is Nomination?

Nomination is a simple yet powerful facility allowing mutual fund investors to appoint one or more nominees; typically, family members like spouses, children, or parents, who gain immediate access to your folios upon death. Unlike outright ownership transfer, the nominee acts as a trustee, holding units temporarily until legal heirs claim them under succession laws. This distinction is crucial: nomination streamlines logistics but doesn't alter legal inheritance rights.

Why Nomination Matters?

In a country where mutual fund folios remain largely un-nominated, families face protracted battles. Without it, heirs must procure succession certificates or probate from courts, costing thousands in fees and taking 6-24 months. Nomination cuts this to weeks, ensuring liquidity for dependents amid grief. For instance, an investor's Rs 50 lakh folio, if nominated to his wife, transfers swiftly; otherwise, children might litigate for years, eroding value through inflation and missed opportunities.

Without nomination, transmission involves probate or succession certificates, which can take months or years and incur high legal costs. Registering a nominee simplifies this, emphasizing rightful ownership and ease of transfer for spouses, children, or dependents. In 2026, with rising SIP adoption among millennials, un-nominated folios risk family discord—SEBI data shows over 20% of folios lack nominees, leading to avoidable delays.( Source: https://mas360.moneylife.in/article/sebi-report-flags-alarming-lack-of-nominations-in-demat-accounts/4525.html)

How to Register or Update Nomination?

The process is investor-friendly, digitized via AMC portals, MF Central (mfcentral.net), or RTAs like CAMS and KFintech. Download Form ANF (Addition/Change of Nomination) from amfiindia.com or your fund house site.

Step-by-Step: Registering or Updating Nomination

1. To make a nomination while investing with a mutual fund for the first time, the applicant may by fill up the ‘Nomination’ section provided in the account opening application form.


2. To register a nomination subsequently, the investor needs to fill up the prescribed Nomination form.


3. Submit the duly completed Nomination form at the designated investor service centre of the mutual fund or its Registrars.


4. Nomination once made can be changed subsequently any time and any number of times.


5. A person may nominate up to three persons


6. Clearly indicate the percentage of allocation/share in favour of each of the nominee against their names, (Max 100%). Such allocation/share shall be in whole numbers without any decimals.


7. In the event the percentage of allocation /share for each of the nominees is not specified, the AMC shall settle the claim equally amongst all the nominees.


8. The Nomination Form is required to be signed by the unit holder (with hand-written signature).


9. In case the units are held jointly, all joint holders will need to sign the nomination form, irrespective of the mode of operation of the account (i.e., whether by ‘anyone or survivor’ or ‘jointly’).

Updates are equally simple—submit a fresh ANF anytime, post-events like divorce or new births. No fees apply, and it's irrevocable without AMC approval. Pro tip: Link folios via multiple folio consolidation on MF Central for one-stop nomination across schemes.

Transmission: Seamless Transfer Post-Demise

Transmission activates upon an investor's death, transferring units to nominees or legal heirs. Nominees must submit Transmission Request Form (TRF) with:

• Death certificate (registered, apostilled for NRIs).


• Folio statement, KYC of claimant, and relationship proof (affidavit/ indemnity bond for claims >Rs 5 lakh).


• No-objection certificates from other heirs if needed.

For nominated folios under Rs 5 lakh (single claimant), the process is swift—15-30 days. Larger or contested claims require bank guarantees or court orders. Joint folios transmit to survivors automatically (first to second holder, etc.). AMCs/RTAs verify within 30 days per SEBI timelines, crediting units to the claimant's folio.

Without nomination, heirs face hurdles: succession certificate, or probate for wills. SEBI has simplified this process via "Mature Unclaimed Investments" portals, but prevention is always better than cure. Transmission upholds legal rights—nominees must hand over to heirs if challenged—ensuring family equity.

Gifting Mutual Funds: Lifetime Legacy Building

Gifting adds proactive flair—transfer units during life to family, skipping inheritance taxes (none in India for gifts to relatives). Ideal for wealth transfer to children (education funding) or spouses (portfolio balancing). SEBI allows partial/full gifting via Form TAF (Transmission Application Form variant) or AMC-specific apps.

Process for gifting mutual funds:

1. Ensure donor/recipient is KYC compliant.


2. Submit gift deed (stamped Rs 100-500, notarized), folio statement, and consent letter specifying units/value.


3. AMC debits donor, credits recipient's folio (same PAN family-linked; others need fresh KYC).


4. Tax-free for relatives; non-relatives face clubbing provisions under Income Tax Act.

Example: Let us say you gift Rs 10 lakh equity units to a child turning 18. The units will reflect in their demat, building independence without transmission waits. There are no limits to gifting but make sure to track LTCG taxes on future redemptions. Many online platforms streamline this, boosting family portfolios ethically.

The indispensable role of a Will

Nomination eases access but doesn't define shares; a will does. Under Indian laws, intestate succession defaults to Class I heirs (spouse/children), but ambiguities arise in blended families or unequal assets. A registered will, probated if contested, explicitly allocates mutual funds, overriding nomination logistics.

Draft a will via lawyers (Rs 5,000-20,000 cost), and register it at sub-registrar (Rs 1,000 stamp duty), and mention folio details/UPIs. Pair it with nomination: nominee handles quick transfer, will dictates distribution. Update the details post-80C claims or portfolio shifts. For HNWIs, trusts supersede both, but wills suit most.

Actionable Advice for Investors

• Nominate now: 80% of delays stem from absent nominations—check folios today.


• Annual review: Any life changes should be updated within 30 days.


• Educate family: Share login credentials securely via password managers.


• Combo strategy: Nomination + Will + Power of Attorney = Bulletproof planning.


• Seek Help: Use MF Central's free tools or advisors for compliance.

As a footnote, don't let oversight undo your discipline. Nomination and transmission aren't paperwork—they're your family's safety net, ensuring rightful ownership and effortless legacy handover. Act today; your loved ones will thank you tomorrow. By acting now, you gift your family hassle-free access to your mutual fund legacy.

An Investor education and Awareness initiative of Aditya Birla Sun Life Mutual Fund

All investors have to go through a one-time KYC (Know Your Customer) process. Investors to invest only with SEBI registered Mutual Funds. For further information on KYC, list of SEBI registered Mutual Funds and redressal of complaints including details about SEBI SCORES portal, visit link : https://mutualfund.adityabirlacapital.com/Investor-Education/education/kyc-and-redressal for further details.