Ronak (Trainee) (126 Points)
17 January 2011Hi,
The deceased unit holder of a mutual fund has appointed Mr. A as his nominee to the said units. However in his last will he has appoinrted Mr. B & C as the executors of the property. In whose favour should the units be transmitted? Plz. Guide......
Rgds, Ronak
CA CMA CS Ram Pavan Kumar Melam
(CA)
(6980 Points)
Replied 17 January 2011
Nomination and will are two different ways of passing the money after death of the investor. Normally Will deals with number of investments / assets and the details as to how the same will be divided among inheritors.
On the other hand, nomination deals with one financial asset (such as a bank fixed deposit, savings account, life insurance policy) and the nominee merely collects the funds on behalf of the legal heirs. Through will the amount of assets that will be inherited by each heir are clearly indicated, but nomination is merely a right to collect the amount and then re-distribute the same to legal heirs as per law.
However, sometimes a problem may arise, wherein an investor may nominate one person for his particular asset, but his / her Will may indicate some other person who has to inherite those assets. In that case, the Will will supercedes the nomination; and nominee will merely collect the funds and give to the legal heirs mentioned in the will.
In case there a nomination but no Will, then the nomination will be applicable. If there is no Will and no nomination, then the amount will be paid to the legal heirs on production of the Succession Certificate or any other legal evidence to show that they are the heirs. One has to apply in court for a Succession Certificate which usually takes a few weeks / months. To avoid such legal complications, the best way is to nominate and draw up a Will.
The other view is that the nomination process would override any title or interest of legal heirs.
Ronak
(Trainee)
(126 Points)
Replied 17 January 2011
Hi,
Thank u sir for ur contribution. Can u suggest the applicable laws/ules pertaining to nominee of a mutual fund uits and those relating to wills made by a german christian.
Thanx in advance,
Ronak
CA CMA CS Ram Pavan Kumar Melam
(CA)
(6980 Points)
Replied 17 January 2011
SEBI stipulated in the year 2002 by its Mutual Funds Regulations that an asset management company should provide an option to the unitholder (only individuals) to nominate a person in whom the units held by him shall vest in the event of his death," SEBI sources said.
Further, the Mutual Funds Regulations of SEBI has also stipulated that nomination in respect of units would stand rescinded upon the transfer of such units. Transfer of units in favour of a nominee would be valid discharge by the asset management company against the legal heir.
Wills made by Indian Christians are generally governed by the Indian Succession Act, 1925. The Act is attached for your ready reference.
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