How to Nominate Beneficiaries in Indian Mutual Funds and Update Details

When you invest in mutual funds in India, you’re not just growing your money-you’re building a safety net for your family. But if something happens to you, that money won’t automatically go to the people you care about unless you’ve named a beneficiary. Many investors skip this step, thinking it’s optional or too complicated. It’s neither. Nomination is simple, mandatory in most cases, and one of the most important things you can do to protect your loved ones.

Why Nomination Matters in Mutual Funds

Without a nominee, your mutual fund units become part of your estate. That means your family has to go through probate-a legal process that can take months or even years. They’ll need to submit death certificates, succession certificates, and sometimes even court orders just to access funds you worked hard to save. With a nominee, the process is quick. The fund house pays the amount directly to the person you named, usually within 15 days of receiving the documents.

Indian regulations under SEBI require all mutual fund investors to provide nominee details at the time of investment. If you didn’t, you can add one later. But if you’re investing through a distributor or online platform, the system often asks you to set a nominee upfront. Don’t ignore it. Even if you’re young, healthy, and single, life is unpredictable. A nominee ensures your money doesn’t get stuck in bureaucracy.

Who Can Be a Nominee?

Not just anyone can be your nominee. SEBI rules are clear: only individuals can be nominees. That means you can name your spouse, child, parent, sibling, or even a close friend. You cannot name a trust, a company, a charity, or a non-individual entity.

Also, you can name more than one nominee. If you do, you must specify the percentage share each person gets. For example, you can assign 50% to your spouse and 25% each to your two children. The total must add up to 100%. If you don’t specify shares, the fund house will divide the amount equally among all nominees.

Minors can be nominees too-but you must name a guardian who will manage the funds until the child turns 18. That guardian can be a parent, relative, or legal custodian.

How to Add a Nominee When Starting a Mutual Fund

If you’re investing for the first time, adding a nominee is part of the onboarding process. Here’s how it works:

1. Open a mutual fund account through a distributor, bank, or online platform like Groww, Zerodha, or Coin by Zerodha.
2. During KYC verification, you’ll be asked to fill out a nomination form.
3. Enter the nominee’s full name, relationship to you, date of birth, and address.
4. Choose the share percentage for each nominee.
5. Sign the form digitally or physically, depending on how you’re investing.

Most platforms now auto-fill nominee details from your KYC if you’re using Aadhaar-based e-KYC. But you still need to confirm or update the nominee name and share. Never skip this screen. It’s not just a checkbox-it’s a legal instruction.

How to Update a Nominee After Investment

Life changes. You get married. You have kids. You lose someone. Your nominee might no longer be the right person. Updating your nominee is easy and free. You don’t need to sell your funds or switch platforms.

Here’s how to update:

1. Log in to your mutual fund account on the fund house’s website or your distributor’s app (like AMC portal, CAMS, or KFinTech).
2. Go to the ‘Profile’ or ‘Demat Account’ section.
3. Look for ‘Nominee Details’ or ‘Update Nominee’.
4. Click ‘Add/Modify Nominee’.
5. Enter the new nominee’s details: full name, relationship, date of birth, address.
6. Update the share percentages if needed.
7. Submit the request.

Some fund houses require a physical form. Download the ‘Nomination Form’ from the fund house’s website (usually called ‘Form 1’ or ‘Nomination Form’), fill it out, sign it, and send it to the registrar (CAMS or KFinTech) along with a copy of your ID and the nominee’s ID. You can also visit a branch of the distributor or bank where you invested.

Once submitted, the update takes 5-10 working days to reflect. You’ll get an email or SMS confirmation. Keep a copy of the form for your records.

What Happens If You Don’t Update After Major Life Events?

Let’s say you got married and never updated your nominee. You named your parents as beneficiaries when you were single. Now you’re married with a child. If you pass away, your spouse and child might not get your mutual fund money-even if you wanted them to. Your parents would receive it, because they’re the legally recorded nominee.

That’s not just unfair-it’s a financial risk. Many families have lost access to lakhs of rupees because the nominee wasn’t updated after divorce, remarriage, or the death of a previous nominee.

Same goes for children. If you named your eldest child as nominee and later had a second child, but didn’t update, the second child won’t automatically get a share. You must specify shares for each nominee.

Common Mistakes to Avoid

Even smart investors make these simple errors:

• Using nicknames - Always use the full legal name as it appears on ID documents. ‘Raj’ instead of ‘Rajesh Kumar’ can cause delays.
• Forgetting to update after marriage/divorce - Your ex-spouse might still be listed as nominee. Fix this immediately.
• Not specifying shares - If you name two nominees but don’t assign percentages, the fund house splits it 50-50. That might not match your wishes.
• Using a joint nominee without a guardian for minors - If your nominee is a child under 18, you must name a guardian. Otherwise, the claim gets stuck.
• Thinking SIPs have automatic nomination - Nomination is tied to your folio, not your SIP. Even if you’re investing monthly, you still need to set the nominee separately.

How to Check Your Current Nominee Details

Don’t assume you know who’s listed. Log in to your account and check. Here’s how:

• On CAMS portal: Go to ‘My Holdings’ → Select a folio → Click ‘Nominee Details’.
• On KFinTech: Visit the investor portal → ‘Profile’ → ‘Nominee Information’.
• On fund house websites like HDFC Mutual Fund, ICICI Prudential, or Axis Mutual Fund: Log in → ‘My Portfolio’ → ‘Nominee’ tab.
• Check your latest statement. Nominee details are printed on the folio statement.

If you’re unsure which registrar handles your funds, look at the fund house’s website or call their investor helpline. Most AMC websites have a ‘Folio Search’ tool where you can enter your PAN to find all your folios.

What If Your Nominee Dies Before You?

If your nominee passes away before you, the nomination becomes void. You must update it immediately. The fund house won’t notify you. It’s your responsibility.

If you don’t update and you pass away, your mutual fund units go into your estate. That means probate again-long delays, legal costs, and emotional stress for your family. Don’t wait. Add a new nominee as soon as you hear the news.

Can You Change Your Nominee Multiple Times?

Yes. There’s no limit. You can update your nominee as often as your life changes. Each update replaces the previous one. There’s no fee. No penalty. Just a form and a signature.

Some people update their nominee every time they file their income tax return. It’s a good habit. Make it part of your annual financial review.

What About Joint Accounts?

If you hold mutual funds jointly with someone else (like your spouse), the nomination works differently. The surviving joint holder automatically inherits the units. The nominee only steps in if both joint holders pass away.

So if you have a joint folio, you still need a nominee-for the event that both of you are no longer alive. Don’t skip it just because you have a joint account.

Final Tip: Keep It Simple, Keep It Updated

Setting a nominee isn’t about planning for death. It’s about showing care for life. It’s about making sure the people who depend on you don’t face extra hurdles when they’re already grieving.

Do this today: Log in to your mutual fund account. Check your nominee. If it’s missing, outdated, or unclear-update it. It takes 10 minutes. And it could save your family months of paperwork.

Every rupee you’ve invested in mutual funds is a promise. Nomination is how you keep it.