How Can You Claim Mutual Fund Units After Death of the Holder?
Most of us invest in mutual funds or other investment options to achieve our individual and family member’s life goals. But do you know the process that your loved ones have to carry out to avail mutual fund investment after you die?
After you die, the fund houses transmit the mutual fund units to the surviving unit holders or nominees and legal heirs.
Unlike our previous generations, most of us don’t have any physical investment statements for our family members to find out after our death. Hence, your nominees or heirs must know your investments. Tell them the procedure that they need to follow after your death to take the best course of action.
While most fund houses have a standard procedure for transmitting mutual fund units, there might be a slight variation in the process among the different fund houses.
You can download the required forms and annexures from the mutual fund house’s website.
During transmission of units, three types of situations can arise:
1.Transmission of units to surviving joint holders
2. Nominee is registered
3. Nominee is not registered with the mutual fund
Here’s what you need to know and do in these three scenarios.
1.Transmission of units to surviving joint holders
If several investors jointly held the mutual fund investments, the fund house pass the units on to the second holder after the death of the first holder.
Here are the documents that would be required in such a scenario:
2. Nominee is registered
The mutual fund units are transferred to the nominee after the death of the sole investor. The nominee may redeem the units or stay invested after the transmission of the units are successful.
However, you need to note that the nominee doesn’t ‘own’ the mutual fund units. It holds the units ‘in trust’ till the legal heir claims it. Legal heirs of the deceased investor may dispute the transfer of investments to the nominee. In that case, as per the SEBI Regulations, the units are held ‘in trust’ by the nominee till the issue is sorted.
The nominee needs to make an application to get the units of the mutual fund units transferred. The fund houses transfer mutual fund units to the registered nominee within 30 days.
There can be multiple nominees as well. In this scenario, each nominee will receive a portion of the mutual fund units as per the instructions set by the unitholder.
Here is the list of documents:
Nominee’s cancelled cheque or copy of the nominee’s recent bank statement or passbook is required.
A nominee is not registered
If there are no nominees or joint holders, the mutual fund units are transferred to the legal heirs. However, the legal heirs need to support their claims with the necessary documents.
This process is complicated and requires several documents. Besides the regular documents, there are a few documents the claimant needs to provide.
If the transmission amount is below or Rs 2 lakh:
If the transmission amount is more than Rs 2 lakhs:
Individual Affidavits are needed from each legal heir as per Annexure-III.
The claimant also needs to submit any one of the documents mentioned below:
Conclusion
We don’t know what the future holds for us. However, we can take actions that may make it easier for our loved ones to access our investments after our death. Hence, it is essential to add a nominee and make them aware of the procedure.
This blog is purely for educational purposes and not to be treated as personal advice. Mutual fund investments are subject to market risks, read all scheme-related documents carefully.
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