The Securities and Exchange Board of India (SEBI) has implemented mandatory nomination requirements for single-holder demat accounts and mutual fund folios, effective September 1, 2026. In a circular dated May 29, 2026, SEBI stated that the modification will "enhance the ease of investor onboarding and ease the nomination process." Under these new guidelines, investors cannot leave the nomination field blank and must either submit a nominee's details or a signed declaration to opt out at the time of opening an account or for existing folios. However, nomination remains optional for jointly held accounts, where consent of all joint-holders is required for mentioning or changing a nominee.
Investors can now appoint up to three nominees and specify the percentage share to be allocated to each, with assets divided equally among all nominees if no specific allocation is mentioned. If division results in odd lots or fractional balances, the remaining units or securities will be transferred to the first nominee listed in the nomination form. Investors who do not wish to appoint a nominee can formally opt out by submitting the prescribed declaration through their broker, bank, or mutual fund platform account. This opt-out option allows the folio holder to record their decision while remaining compliant with regulatory requirements.
If no nominee is registered, holdings are transferred to legal heirs through the securities transmission facility, which SEBI has simplified to reduce paperwork and processing time. At its board meeting on June 19, 2026, SEBI introduced a new quick transmission processing (QTP) facility for small-value claims, applying to claims of up to ₹10,000 for physical holdings and up to ₹30,000 for dematerialised holdings. The facility aims to facilitate efficient processing with minimal documentation requirements, while limits for simplified documentation have been doubled from ₹5 lakh to ₹10 lakh for physical holdings and from ₹15 lakh to ₹30 lakh for dematerialised holdings.
The final ownership of money in bank accounts, mutual funds, or other assets is generally determined by a valid will, succession laws, and the rights of legal heirs, not merely by the nominee mentioned in the account. If the deceased person has left a legally valid will, assets are distributed according to that will. In the absence of a will, applicable inheritance or succession laws decide who has the rightful claim over the money and property. Although probate is no longer mandatory in India following a legal change in 2025, it can still play an important role in ensuring smooth asset transfer and reducing disputes.
A comprehensive estate plan includes several legal documents that clearly state your wishes and explain asset distribution among family members. While not every component is necessary for everyone, essential documents may include will, trusts, power of attorney, and beneficiary designations. A will states asset distribution and names guardians for minor children, while trusts help manage assets and reduce estate taxes. Power of attorney authorises a trusted person to handle financial or legal affairs if you become incapacitated, and beneficiary designations ensure assets such as life insurance, retirement accounts, and investments are directly transferred to named beneficiaries without probate.
A well-prepared estate plan ensures original owner wishes are honoured, minimises disputes among legal heirs, and provides clarity during difficult times. Estate planning typically requires assistance from an estate planning lawyer, as choosing nominees for accounts or policies is crucial, but they only act as custodians until legal heirs receive assets. The new SEBI rules emphasise that while nomination is mandatory, investors must avoid common mistakes like failing to update nominees after major life events or assuming nominees automatically become legal owners upon death. The process for transferring holdings differs across mutual funds, demat shares, and physical certificates, requiring different documentation and procedures.
