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How to transfer mutual fund holdings when an investor dies?

Mudit Kapoor     November 29, 2018

People invest with a hope of providing a better life for themselves and their loved ones. But the inescapable fact is that life does not always go as planned.

Death is a hard truth. But what happens to investors' mutual funds units when they die?

In the event of death, the units usually get transferred to the nominee. However, the mutual fund needs to be in the name of one investor for the units to be transferred to the registered nominee.

If the mutual fund has multiple unit holders, the units are transferred to the surviving unit holders.

It's also possible to have multiple nominees for a fund. In such a case, each nominee will be assigned the portioned number of fund units according to the intent of the original deceased investor.

In case the registration of nominee has not been done, then the legal successor of the deceased investor can claim the units by producing required documents and proving heirship.

Below are the documents required to transfer mutual fund units:
  • Letter from claimant to the fund house requesting for transmission of units.
  • Original death certificate or notarised copy of death certificate (If online death certificate is provided then no attestation is required)
  • Bank proof along with claimant name, account number, IFSC, signature attested by banker with banker's official name, designation, signature
  • Copy of KYC acknowledgement and FATCA of the nominee/claimant

In case the claimant is a minor then:

  • Original attested copy of the proof of date of birth for the minor
  • Original attested copy of proof of identity for the guardian
  • Any appropriate document as evidence for minor-guardian relationship
  • Attested copy of proof of identity for guardian, if the nominee is a major but mentally unsound person

Please note, different mutual fund houses may ask for some extra documents. On submitting these documents to the asset management company, the units can be transferred to the name of the nominee within 30 days.

The units are allotted at the prevailing NAV (net asset value) at the day when such request of transfer is made. Also, in case of transfer of mutual fund holdings after someone's death, the nominees do not have to pay any tax. Tax liability would only arise at the time of redemption of units.

Also read: how to transfer your PF balance from your previous office

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