It is one of the best things a parent can do for financially securing their child’s future in the long run. Informing and teaching the child as to what are the perils of getting into a debt trap of availing a personal loan or a home loan and the bigger benefits of investing early and following a goal oriented savings approach is what I required from a prudent parent.
Opting for a good fund house and investing the right amount of your savings so as to fulfill your child’s higher education needs should be your primary option. But if your child is a minor, then you, as a parent should be his/her guardian. But once he / she turns to a major there are a few official things that will be carried out.
Mutual funds will send advance notice to the registered correspondence address advising the guardian and the minor to submit an application form along with the prescribed documents for changing the status of the account to “major”.
The notice shall clearly state that all existing standing instructions and transactions, including SIP, STP, and SWP, registered earlier for a period beyond the date when the minor becomes a major shall be suspended.
The account shall be frozen for operation by the guardian on the day the minor becomes a major and no transactions shall be permitted till the documents for changing the status as required are received. Hence, to change the status, investors on their part must submit a service request form/letter duly filled up and containing details of the fund, name of the major (investor) and folio number, along with KYC acknowledgment (of the minor who has turned major) and the signature of the minor attested by a bank manager .