Mutual Fund Investments

Loss of a loved one in the family is already a tough thing to cope with, and additionally, those financial affairs! But the fact is, you have to deal with the condition positively and smartly, otherwise, you are going to lose much more. But claiming the mutual fund after someone’s death is not a very tough thing; rather, it follows very straightforward steps. Here in this blog, we are going to reveal who can inherit the mutual fund, what the process is for transferring the MF, tax implications, and more. So, without any further ado, let’s jump into the brief discussion. 

Can You Claim the Mutual Fund Investment? 

Before just jumping into the process of transferring the unit, you need to know whether you have any role here or not, depending on your relationship with the disease investor, the mutual fund is going to handle the claims accordingly. Three main types of eligible candidates can claim the units. Know them below, 

1. Joint Account Holder

If the mutual fund investment has a joint holder, then it means the investment was not made by a single person. Here, at least two people are needed to start the investment. 

If one person deceased, then the other surviving holder of the investment will claim the units. But if both the holders of a joint account are deceased, then the power automatically goes to the legal heirs to claim the units. 

The needed documentation is

•  Your KYC
• Transmission form 
• Death certificate
• A copy of the account statement

2. Nominee

People mostly choose a nominee who can inherit their investment in case of death. Including family, the nominee can be anybody. If you are that nominee, then your task is easier. In some cases, fund houses ask for a notarized affidavit, but generally, a registered nominee can easily start the process with minimal hassle. The documentation you need to provide is, 

• Transmission form 
• Death certificate 
• Account statement of the investor 
• Your KYC, like Aadhar, PAN, etc. 

Remember, the process of transferring MF units in your name generally takes 10 to 15 working days after the documentation is over. 

3. Legal Heir

This is a little bit complex way to transfer the units because the investor didn’t choose any nominee; rather, he had a sole account. At this stage, you have to legally establish your rights in terms of claiming the asset, and accordingly, the fund house will transfer the investment after verifying the legal ownership. 

The documentation you need to provide, 

• Transmission form 
• KYC documents 
• Death certificate 
• Notarized indemnity bond 
• An affidavit 
• A succession certificate (it’s a document that confirms whether you are the rightful heir or not. It might take a few weeks to months, depending on the court. 

Process To Transfer The Unit

Once you know your role in the investment unit, follow the steps to transfer the unit, as the process is similar for all. 

1. Submit The Documents

This is the basic step to start with. Depending on your role as a joint holder, nominee, or legal heir, you may need the documents accordingly. The common ones are KYC, death certificate, folio number, MF account statement, and other details. 

2. Contact Your AMC 

When you are aware of your role, you need to reach out to the AMC or Asset Management company directly via RTA (Register and Transfer Agent) like CAMS or KFintech. They will provide you with the transmission form and the other documents applicable. 

3. Submit The Request 

On the online platforms, you can do the entire task of filling up the transmission request form and submitting the required documents along with it. 

4. Wait Until The Process Completes 

Generally, it takes around 10 to 15 working days for transmission. After the request gets approved, the units will be transferred to your name, and you can go for redemption, or you can also continue holding the investment.

Taxation 

Generally, in India, there is no specified inheritance tax. So, if you are receiving the mutual fund units as a legal heir or a nominee, then you won’t be asked to pay any tax during the transfer. But if you decide to redeem the units after a certain period, then a tax might apply on your capital gains on the basis of long-term or short-term investments. But more specifically, it depends on how long the original investor was holding them. 

Also, Check – Capital Gain Harvesting in Mutual Funds

Wrapping Up 

If you have recently lost someone or have a fear like that, then take a deep breath first and follow the mentioned steps methodically. If you are unaware of your role, then never hesitate to seek help from a reputed financial advisor to get authentic guidance. Generally, the found houses are supportive in such cases. So, don’t worry, and hit the steps now. And also don’t forget to legally mention any of your loved ones as a nominee if you are holding any mutual funds. 

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Disclaimer – This article is for educational purposes only and does not intend to substitute expert guidance. Mutual fund investments are subject to market risks. Please read the scheme-related document carefully before investing.