Posted by: Girija Gadre on Feb 19, 2018, 06.30 AM IST
To accumulate money for higher education or marriage, parents usually set aside funds in the children's name so that the investments remain untouched and can be used when needed.
Investments in mutual funds can be made in the name of minors, subject to certain conditions.
No joint holder is allowed in a minor's mutual fund folio. The minor is the first and sole holder in the folio. The minor has to be represented by a natural guardian (father or mother) or a legal guardian (court appointed).
As a minor is unable to enter into a valid contract, the application form must be filled up and signed by the guardian.
Self attested copies of the following documents should be provided along with application:
PAN of the guardian
Copy of document evidencing date of birth of minor (birth certificate, passport)
Payment instrument (cheque from the minor's account or from the guardian's account).
It is mandatory for the guardian to comply with KYC formalities for investments in funds.
Operation of the folio
The guardian can operate the mutual fund account till the minor turns 18. However, once the minor turns 18, all transactions in the account are suspended until the status of the folio is changed from minor to major.
Points to note
1. Instructions with respect to SIP/SWP or STP can be registered only till the date of the minor attaining majority.
2.In case of change of guardian, NOC from existing guardian or court order for new guardian should be submitted, if existing guardian is alive.