Most of us make investments in hopes of securing our future and of our loved ones as well. Mutual funds are no exception. People invest in mutual funds with both long and short-term goals. But it is not necessary things go as planned. One such case is of unfortunate death of the investor.
In case of death, the mutual funds generally get transferred to the nominee(s). This can happen only if the funds are in the name of a single investor. In case there are multiple investors involved, the units get transferred or distributed among other surviving investors.
In case there are multiple nominees in the fund, each nominee gets a proportioned number of units assigned as applicable and suitable in accordance with the intent of the deceased investor.
Another case could be no mention of a nominee. In this case, the legal successor or heir can claim the benefits by reproducing valid and acceptable legal successor certificate and other related documents.
The transfer of units would require a list of documents to be reproduced:
- A requesting letter from the claimant to the fund house regarding the transmission of units.
- Original or notarized copy of death certificate. If you have the online copy, then any form of attestation is not required.
- A proof of bank which bears claimants name, address, account number, IFSC, banker attested signature bearing the name of banker, signature, and designation.
- KYC acknowledgment copy and claimant and nominee’s FATCA if applicable.
If the claimant is minor:
- Date of birth proof of the minor, original attested copy
- Guardian’s identity proof, original attested copy
- Documented evidence of a guardian-minor relationship
- If the nominee has different mental abilities but is a major, proof of the guardian’s identity.
These are the general documents asked in case of investor’s death and transfer of units. There may be some specific documents a fund house requires in order to do the needful. Subject to the definitude of the documents, the process may take 30-45 days for the funds to get transferred to claimant’s name.
The allotment of units happens at the prevailing NAV as on the day on which such request is made. There are no tax implications in case of transfer of funds upon the original investor’s death. The tax would be applicable when the nominee or claimant redeems the funds.