Most PMS and AIF investors spend considerable time choosing a strategy, evaluating fees, and reviewing performance — and almost no time thinking about a far more consequential question: what happens to this portfolio if something happens to me?
Without proper nomination and succession planning, a portfolio built over decades can leave your family navigating months of paperwork, court processes, and needless delay at an already difficult time.
This guide covers how nomination and transmission work for PMS and AIF holdings in India, the key legal distinctions worth understanding, and a practical checklist to get your succession planning in order.
Why This Matters More for PMS/AIF Than Most Investors Realise
Unlike a mutual fund unit sitting in a folio, PMS holdings sit directly in your own demat account — meaning the standard demat nomination and transmission rules apply directly to your PMS portfolio.
AIF units, similarly, are increasingly held in demat form and follow comparable succession principles, coordinated through the fund’s Registrar and Transfer Agent (RTA).
Given that PMS and AIF tickets start at ₹50 lakh and ₹1 crore respectively, the stakes involved in getting succession planning wrong are considerably higher than for a smaller, more routine investment.
Nomination vs. Inheritance: An Important Legal Distinction
This is a genuinely important point that surprises many investors: a nominee is not automatically the same as a legal heir with full beneficial ownership.
Under Indian law, a nomination primarily identifies who the depository or fund can smoothly hand the securities to after your death—it streamlines the administrative transmission process.
It doesn’t necessarily override the entitlements of legal heirs under a Will or succession law.
In practice, this means your Will remains the primary legal instrument determining who owns the assets, while nomination makes the transfer process faster and simpler.
The cleanest approach is to ensure your nomination and your Will are aligned—naming the same beneficiary in both wherever possible—to avoid ambiguity or family disputes down the line.
SEBI’s 2026 Nomination Rule Changes You Should Know
SEBI has revised nomination rules for demat accounts and mutual fund folios, effective September 1, 2026. Key changes worth knowing:
- Every new single-holder demat account or mutual fund folio opened from this date must either register a nominee or formally opt out through a declaration — leaving the field blank is no longer permitted
- Investors can appoint up to three nominees per account, and can modify their nomination an unlimited number of times
- Only the nominee’s name and relationship are mandatory; PAN, Aadhaar, and other identification details remain optional
- Where multiple nominees are registered, they can either continue managing the account jointly or split their share into separate accounts after transmission
If you already hold a PMS portfolio and haven’t registered a nominee, address this directly with your provider now, rather than waiting for the new rules to force the issue.
What Happens Without a Nominee: The Legal Heir Route
If no nominee is registered, your legal heirs must go through a considerably more involved process to claim the securities:
Holdings up to ₹5 lakh (per account): Simplified documentation is accepted — typically an affidavit and an indemnity bond — without requiring a court-issued succession certificate
Holdings above ₹5 lakh (per account): A succession certificate or probate is generally required — a formal court process that can take several months, sometimes longer, depending on the complexity of the estate and any disputes among heirs
Given that most PMS portfolios (₹50 lakh minimum) and virtually all AIF holdings (₹1 crore minimum) sit well above this ₹5 lakh threshold, the absence of a nominee on a PMS or AIF account almost guarantees your family will need to go through the full succession certificate or probate process — a meaningful, avoidable burden at an already difficult time.
Joint Holdings: Survivorship Transmission
If your PMS or AIF holding is registered jointly, the process is considerably simpler in one specific scenario: when one joint holder passes away, the assets typically transfer automatically to the surviving holder — a process known as survivorship transmission — without needing the full nominee or legal-heir transmission process.
This is worth considering as part of your broader structuring, particularly for a spouse who should have seamless access to the portfolio.
Using a Will or Trust Alongside Nomination
Given the legal distinction between nomination and beneficial ownership covered above, most estate planning professionals recommend layering nomination together with a properly drafted Will, and — for larger, more complex estates — a Trust structure.
This is particularly relevant for HNIs and UHNIs whose overall wealth planning may already involve a family office structure, where succession planning typically extends well beyond a single PMS or AIF account to cover the full scope of family wealth, business ownership, and multi-generational transfer.
What Happens to Pending Corporate Actions During Transmission?
While a transmission request (particularly one requiring a succession certificate) is pending, corporate actions like dividends, bonus shares, or rights entitlements arising during that period are typically held in a suspense account by the depository participant, rather than being credited directly — and are released to the beneficiary’s account only once the transmission process is finalised.
This is worth noting if a transmission process is likely to take an extended period.
Tax Implications of Inherited PMS/AIF Holdings
A few important points worth understanding:
- Transmission itself does not trigger capital gains tax — the transfer of securities from a deceased holder to a nominee or legal heir is not treated as a taxable sale event
- The original owner’s cost of acquisition and holding period carry over to the person inheriting the securities — meaning if the original holder had held a security long enough to qualify for long-term capital gains treatment, that status typically carries forward
- Tax becomes relevant only when the inheriting party eventually sells the securities, at which point capital gains are calculated using the original owner’s cost basis and holding period
Given the complexity that can arise around fund-specific PMS or AIF structures (particularly for AIF Category III, which is taxed at the fund level), consulting a tax advisor as part of your broader succession planning is genuinely worthwhile, alongside reviewing our AIF taxation guide for the underlying principles.
A Practical Succession Planning Checklist for Your PMS/AIF Portfolio
1. Confirm whether a nominee is currently registered on each of your PMS and AIF accounts — check directly with your provider if you’re unsure
2. Register or update your nomination, keeping in mind the new SEBI framework effective September 1, 2026 (up to three nominees, mandatory declaration either way)
3. Ensure your Will reflects the same intended beneficiaries as your nomination, to avoid ambiguity between the two
4. Consider joint holding with survivorship for accounts where a spouse should have seamless, immediate access
5. Keep a clear, accessible record of which PMS and AIF providers you hold accounts with — a surprising number of transmission delays happen simply because heirs don’t know an account exists
6. For larger, more complex estates, consult an estate planning professional about whether a Trust structure makes sense alongside standard nomination
With Nominee vs. Without Nominee: Quick Comparison
| Factor | With a Registered Nominee | Without a Nominee |
| Documentation required | Prescribed transmission form + death certificate | Affidavit/indemnity bond (up to Rs 5 lakh) or succession certificate/probate (above Rs 5 lakh) |
| Typical timeline | A few weeks, once complete documents are submitted | Several months to longer, especially where a court process is required |
| Legal complexity | Low – administrative process | High – may involve court proceedings, especially for larger estates |
| Family burden | Comparatively low | Significant, particularly for holdings above Rs 5 lakh |
| Recommended for PMS/AIF (Rs 50 lakh+/Rs 1 crore+ minimums) | Strongly recommended | Generally leads to the full succession certificate/probate route |
Frequently Asked Questions
Is nomination mandatory for PMS and AIF accounts in India?
Under SEBI’s revised rules effective September 1, 2026, new single-holder demat accounts (including PMS holdings) must either register a nominee or formally opt out—leaving it blank is no longer an option. Existing account holders are strongly encouraged to update their nomination proactively rather than waiting.
Does a nominee automatically become the legal owner of the PMS/AIF holdings?
Not necessarily. A nominee is primarily positioned to receive the securities through a smoother administrative process, but this doesn’t automatically override the entitlements of legal heirs under a Will or succession law. Aligning your nomination with your Will is the cleanest way to avoid ambiguity.
What happens if my PMS holdings are worth more than Rs 5 lakh and I haven’t registered a nominee?
Your legal heirs will generally need to obtain a succession certificate or probate — a formal court process — before the securities can be transmitted, which can take several months or longer.
Do my heirs pay tax when they inherit my PMS or AIF portfolio?
The transmission itself isn’t a taxable event. Tax becomes relevant only when your heirs eventually sell the inherited securities, at which point your original cost of acquisition and holding period typically carry over to them.
Should I use a Trust for succession planning instead of simple nomination?
For larger, more complex estates — particularly those involving multiple asset classes, business ownership, or multi-generational planning — a Trust structure is often recommended alongside nomination.
For simpler estates, properly aligned nomination and a clear Will are often sufficient. Consult an estate planning professional for guidance specific to your situation.
Review our guide on how PMS exits work to understand the broader lifecycle of a PMS account, and explore how family offices approach comprehensive succession planning for larger estates.