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Thursday, September 29, 2016

Investing Mutual Fund in Child Name and Benefits

 
Mutual Fund Investment to Benefit a Minor Child





You can make investments in MFs in your child's name to meet their long-term goals such as higher education and wedding

1. Can I make a mutual fund investment in the name of a minor child?

Yes, you can make an investment in any scheme of any mutual fund in the name of a minor child. The minor shall be the first and the sole holder in a folio. No joint holder will be al lowed in a folio held by a minor. Guardian in the folio should either be a parent (i.e. father or mother) or a court ap pointed legal guardian.

Minor investments are identified by the date of birth of the investor, so when you make an in vestment you have to provide the child's date of birth and age. You will have to give a copy of age proof namely a copy of the document viz. birth certificate, passport copy , etc. evidencing date of birth of the minor and relation ship of the guardian (natural or legal guardian) with the minor. This needs to be provided while making the first investment or while opening a folio.

2. Can I do an SIP, Systematic Transfer Plan (STP) in the name of a minor?

A mutual fund will register instructions by an investor like SIP / STP in the folio held by a minor.

This instruction will be valid only till the date of the minor attaining majority, even though the instructions may be for a period beyond that date.

3. What happens when the minor child becomes a major or attains 18 years of age?

When a minor becomes a major, all transactions standing instruction, systematic transactions etc. will be suspended. The folio will be frozen for operation by the guardian from the date of minor attaining majority . Prior to the minor attaining majority, the AMC mutual fund will send a notice to unit holder at their registered correspondence address advising the minor to submit, on attaining majority, an application form along with prescribed documents to change the status of the folio from `minor' to `major'. Along with this, KYC (know your customer) acknowledgment letter of unit holder becoming major should also be provided.

4. Can I change the guardian once the investment has been made?

In case of change in the guard ian of a minor, the new guard ian must be a natural guardian (i.e. father or mother) or a court-appointed legal guardian and should submit the requisite documents namely -

(a) No objection certificate (NoC), or consent letter, from existing guardian or court order for new guardian, in case the existing guardian is alive.

(b) KYC acknowledgment letter of the new guardian should also be provided.

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