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:
- Transmission Request Form (Form T2) for
transmission of mutual fund investments to the surviving unitholder/s.
- Original death certificate or photocopy that
is duly attested by a Notary Public or a Gazetted Officer is needed.
- The surviving unit holders need to provide a
copy of the PAN Card if it was not provided earlier.
- Cancelled cheque of the new first unitholder
with pre-printed name or recent bank statement or passbook of the new
first holder needs to be submitted.
- If the surviving holders are not KYC
compliant, KYC Acknowledgment or KYC Form must also be submitted.
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:
- The Transmission Request Form (Form T3) for
transmission of units to the nominee(s) is required.
- Suppose the amount is up to Rs.2 lakh. In that
case, the bank manager needs to attest to the nominee’s signature as per
Annexure-Ia. If the nominee is minor, the signature of the guardian is to
be attested in the form.
- Suppose the transmission amount is over Rs.2
lakh. In that case, the notary public or a Judicial Magistrate First Class
(JMFC) needs to attest the nominee’s signature. The attestation goes in the
space provided in the form under the signature of the nominee.
- The claimant should submit original death
certificate or photocopy that is attested by a Notary Public or a Gazetted
Officer.
Nominee’s cancelled cheque or copy of the nominee’s
recent bank statement or passbook is required.
- Copy of the birth certificate needs to be
provided if the nominee is minor. Also, KYC Acknowledgment or KYC form of
the nominee(s) or guardian is also required in such a situation.
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:
- Documents that establish the relationship
between the claimant/s with the deceased investor/s
- Bond of Indemnity – as per Annexure-II so that
the units are transmitted without production of legal representation.
- Bond of Indemnity is not required if the legal
heirs have submitted the Succession Certificate or Probate of Will or
Letter of Administration where the claimant is named as a beneficiary.
This means that an affidavit per Annexure-III from such legal
heir/claimant(s) is sufficient.
- Each heir needs to give an individual
affidavit as per Annexure-III.
- NOC from other legal heirs as per Annexure-IV
is required whenever it is applicable.
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:
- Notarised copy of Probated Will or
- Succession Certificate issued by a court
- Letter of Administration or court decree if
there is no will
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.
#niveshsimplified #fundvaliz #mutualfundsahihai #investment