Appointing nominees: a guide for investors

A nominee is someone you appoint to act as a custodian of your financial assets in the event of your death. They will be responsible for transferring the proceeds of your investments to your heirs. This guide explains what you need to know about nominees, how to appoint them and why it matters. Appointing a nominee does not transfer ownership of your assets while you are alive: it is a legal mechanism that ensures the smooth transfer of funds in the event of your death.

Published on 27 March 2026

4 min read

Key points:

Nominees can be family members, relatives or anyone you trust.
They act as custodians of your investment proceeds, not necessarily as the legal owner unless specified by inheritance laws.
You can appoint multiple nominees and specify their percentage share.

Why it is important to appoint a nominee

Smooth transfer of assets
Nomination ensures that upon death, your investments are transferred directly to the nominee without any legal complications or delays.
Avoids legal disputes
Without a nominee, your heirs may have to go through a lengthy legal process to claim your assets, which can lead to disputes among family members.
Peace of mind
Knowing that your loved ones are financially protected in the event of your death can provide peace of mind.
Mandatory for certain investments
SEBI, the regulator overseeing all registered entities or intermediaries, requires all investors to appoint a beneficiary or submit a formal request to opt out if they do not wish to appoint a nominee. This applies to all investments in securities, including stocks, bonds, and mutual funds.

Who can be a nominee?

Any individual, including minors (for minors, a guardian must also be appointed).
Note: A trust or entity cannot be appointed as a direct nominee; it must be an individual.
You can appoint more than one nominee and specify their percentage share.

Note: Nomination is separate from your will. While a nominee receives the proceeds, the ultimate legal ownership may be governed by inheritance laws unless stated otherwise in a will.

Regulatory requirement: Mandatory declaration of nominees

SEBI requires all investors to declare their nomination preference for mutual fund schemes and other regulated investment products. Investors may either appoint one or more nominees or choose not to nominate anyone. However, it is mandatory to explicitly indicate this choice in the nomination section of the application form. If you do not wish to appoint a nominee, you must select or state “No” in the nomination section.

Leaving this section blank is not compliant with regulatory norms and may create delays or complications in the transfer of funds if needed.
The declaration ensures clarity in ownership transfer, reduces the scope for disputes and protects both the investor’s intent and the nominee’s rights.

Completing the nomination declaration whether appointing someone or explicitly opting not to means investors comply with SEBI rules and safeguard the smooth execution of their investment instructions.

Things to keep in mind when appointing a nominee

Do:

Choose someone you trust completely.
Clearly define percentage shares if there are multiple nominees.
Keep your nomination details updated after major life events like marriage, the birth of a child or the death of an existing nominee.
Inform your nominee about their role and responsibilities.

Don’t:

Leave the nomination section blank.
Confuse nominee rights with inheritance rights. Appointing a nominee only facilitates transfer; inheritance laws govern ownership.

Updating or cancelling a nomination

Life circumstances move on and your nominee choice may change over time. You can:

Update your nominee and modify nominees or % share.
Cancel a nomination if required.

Bottom line: Appointing a nominee is a simple yet important step

Nomination helps ensure the smooth transfer of your investments to your loved ones. By appointing a trusted nominee and keeping these details updated or explicitly declaring your choice even if you decide not to appoint one, you comply with SEBI regulations. Nomination helps financial institutions facilitate the transfer of assets to legal heirs if the investor passes away and allows them to reach out to the nominee if investments remain unclaimed for a long period.

Disclaimer: This article is for educational purposes only.