Things to remember while investing in mutual funds in a minor child's name
Can you invest in the name of a minor child?
Yes, you can make an investment in any scheme of any fund house in the name of a minor child. The minor shall be the first and the sole holder in such a folio. No joint holders will be allowed in this folio. The guardian in the folio should be either parent or a court-appointed legal guardian.
Investments by a minor are identified by the date of birth of the investor, and so, while making an investment, you have to provide the child's date of birth and age. In addition to this, you will have to give a copy of the age proof, which can be the birth certificate, passport copy, etc. evidencing date of birth of the minor and relationship 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.
Can you invest via SIP or STP?
Yes, a mutual fund will also register instructions by an investor like SIP, STP in a folio held by a minor. However, 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.
What happens when the minor become major?
When a minor becomes a major, all transactions, standing instructions, 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 will send a notice to the unitholder at their registered correspondence address advising the minor to submit, an application form along with prescribed documents to change the status of the folio from 'minor' to 'major'. Along with this, KYC Acknowledgment Letter of the unitholder becoming major should also be provided.