If I nominate my granddaughter as nominee for my mutual fund folio, will the units be transferred to her after my death?

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ET Wealth’s panel of experts will answer questions related to any aspect of personal finance. If you have a query, mail it to us right away. Here are this week’s queries on investments from our readers.

I want to invest through SIPs in a mutual fund in the name of my granddaughter who is above 18 years old. In the mutual fund folio in the name of my granddaughter, opened by her as an adult, can I invest through SIPs from my savings account? If I open a folio in my name and invest, can the mutual fund units be transferred to her folio during my lifetime? If I nominate her as my nominee in respect of my folio, after my death, will the units be transferred to her or repurchase value be paid to her?

Jayant R. Pai, CFP and Head – Products, PPFAS Mutual Fund, replies: As your granddaughter is an adult, she will have to create a mutual fund folio in her own name after completing KYC formalities. Also, any investment in this folio will have to be made from a bank account in which she is one of the account holders. Hence you will not be able to directly fund investments in her name any more. However, you are permitted to gift the intended investment amount to her, which she can then use to invest via her folio. Mutual funds do not permit transferring / gifting of units. Hence you will not be permitted to move the units from your folio to hers during your lifetime. In case you nominate her, the units that she will be entitled to upon your demise will first have to be transferred to her folio. She can redeem them after that.

I am a 30-year-old woman earning Rs 10 lakh per annum. I am the sole breadwinner of my family comprising my mother (55) brother (21) and grandmother (80). My short-term plan is to support my brother’s education and my long term plan is to set up a monthly fund for my mother and grandmother if I were to marry and move out. I would also like some savings of my own. I can save about Rs 35,000-40,000 per month. How do I diversify my investments to achieve my short- and long-term goals?

Raj Khosla, Founder and Managing Director, MyMoneyMantra.com, replies: You should buy a family floater health insurance plan and a minimum of Rs 2 crore term insurance plan with your brother and mother as nominees. For short- and long-term goals and cash flow requirements, you need to have mix of various asset classes. Invest Rs 15,000 through SIPs in debt funds for your brother’s education and systematically withdraw from the same after three years. Invest Rs 15,000 in balanced funds and post office MIPs with horizon of five to seven years. This can be utilised as monthly fund for mother and grandmother. Remaining amount should be invested in diversified equity funds to generate returns for yourself in the long term. Portfolio should be reviewed every three years. It is recommended to avail the services of a financial expert.

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