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Nominee Dies Before You? Update Your Mutual Fund, Bank, Insurance
If your nominee dies before you, your investments stay yours. But failing to update nominations can delay your heirs. SEBI's new QTP rules aim to ease transmission for small claims.
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When you open a mutual fund account, a demat account, a bank deposit, or buy an insurance policy, you name a nominee. That person is the one who gets the asset if you die. But one situation many investors overlook is when the nominee dies before they do.
The nominee's death does not change your ownership. You still control the asset. You can buy, sell, or redeem. The problem comes later. If you die without naming a new nominee, your legal heirs face extra paperwork. They may need a succession certificate, a legal heir certificate, or a probate of will. That can take months.
India's markets regulator, the Securities and Exchange Board of India, is trying to make this easier. At its board meeting on June 19, SEBI approved a new framework called Quick Transmission Processing, or QTP, for small-value claims. The idea is to let beneficiaries get inherited securities without the usual hassle. The regulator has not yet set an implementation date. A detailed circular is expected, which will outline the timeline and operating rules.