Up to 3 nominees allowed: How to split your mutual fund and demat assets

Investors will be able to appoint up to three nominees for eligible single-holder demat accounts and mutual fund folios under SEBI’s revised nomination framework, coming into effect from September 1, 2026. The new rules also allow investors to decide how their securities and mutual fund units should be distributed among nominees by specifying their percentage share.

The changes are aimed at making the nomination process easier and reducing complications for family members and legal heirs when an investor dies.

How can you allocate assets among 3 nominees?

Under the revised framework, an investor can nominate up to three people and specify the percentage of assets each nominee should receive. This allows investors to structure the distribution according to their preference instead of leaving the allocation unclear.

For example, an investor could nominate three family members and allocate the holdings in a 50:30:20 ratio. The percentages specified in the nomination form would determine the respective share of each nominee.

Investors should ensure that the percentages entered across nominees correctly reflect their intended distribution.

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What if you don’t specify?

Investors who appoint multiple nominees but do not mention a specific allocation will not leave the distribution entirely undefined. According to the revised rules, the assets will be divided equally among all the nominees.

For instance, if an investor appoints two nominees without specifying their respective shares, each will receive 50%. If three nominees are registered without an allocation, each will receive one-third of the assets.

Where the division results in an odd lot or fractional balance, the remaining securities or units will be transferred to the first nominee listed in the nomination form, as per the distribution rules.

Nomination preference

From September 1, investors cannot simply leave the nomination field blank when opening a single-holder demat account or registering an eligible mutual fund folio. They will have to either provide nominee details or submit a signed declaration choosing to opt out of nomination.

This means investors who do not want to name anyone can still formally record their decision rather than leaving the nomination section incomplete.

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What about joint accounts?

The revised nomination requirement applies differently to jointly held accounts. Nomination will remain optional for jointly held demat accounts and mutual fund folios. Any nomination or change to an existing nomination in such cases will require the consent of all joint holders.

Why should investors review their nomination?

Investors should also periodically review nominee details to ensure they remain updated. An outdated nomination can create complications for legal heirs, particularly after major life events or changes in family circumstances.

Investors should check their existing nomination details and ensure that names, details and allocations accurately reflect their wishes. They should also update nominations after major life events, such as marriage, divorce, the death of an existing nominee or the birth of a child.

The nomination process can help streamline transmission of investments after an investor’s death. However, investors should not assume that a nominee automatically becomes the legal owner of the assets; succession-related rights can involve separate legal considerations.