Guide on Retrieving Mutual Fund Holdings Upon Deceased Investor
In the event of an investor's demise, the process of transferring their mutual fund investments is known as transmission. This allows the ownership of mutual fund units to be legally transferred to joint holders, nominees, or legal heirs[1]. Here's a step-by-step guide on how this process works in India.
The Transmission Process
- Inform the Asset Management Company (AMC) or the mutual fund registrar about the investor’s death by submitting a death certificate (original or notarised copy)[3][5].
- If a nominee is registered, the nominee must submit a claim form along with valid KYC documents (PAN card, Aadhaar, identity proof), bank account proof, and other required identification[3][2]. The nominee’s nomination details must be updated or verified if needed[2].
- If no nominee is registered, the legal heirs must provide legal heir documents like a succession certificate, legal heir certificate, or probate of the will, along with an indemnity bond and proof of relationship with the deceased[3][5].
- The AMC verifies all the documents and processes the transmission request, transferring the mutual fund units into the nominee’s or the legal heir’s name. The new holder needs to ensure their KYC details are updated afterward to avoid future issues[3][5].
- In case of joint holders where one holder passes away, the ownership usually passes to the surviving holder(s), but proper documentation and KYC update are still necessary (individual mutual fund house policies may vary)[4].
- Some AMCs might require a Transmission Request Form (T-2) or equivalent, and additional documents such as a cancelled cheque with the claimant’s name, affidavits from other legal heirs, and NOCs to avoid disputes, especially for amounts exceeding certain limits (e.g., Rs. 2 lakhs)[5].
- It is advisable to consult the specific mutual fund AMC or registrar and sometimes legal advice to ensure procedural correctness, as forms and documentary requirements vary slightly between fund houses[5].
Key Documents Required
- Death certificate (notarised or attested)
- Nominee claim form with KYC documents (for nominees)
- Legal heir certificate, succession certificate, or will probate (for legal heirs if no nominee)
- Indemnity bond
- Proof of relationship with deceased
- Updated KYC for the new holder
Factors Affecting the Claim Scenarios
The type of Mutual Fund account (joint or sole) affects the claim scenarios for the transmission of units. In the case of a joint account or a registered nominee, the claimant can file a claim for the transfer of investments by submitting a letter or transmission request form, a notarized copy of the death certificate, and KYC documents.
If multiple nominees or legal heirs are present, the investments are divided between them according to the percentage share specified in the nomination documents or according to instructions provided in the probated will, respectively.
Timeframe for Transmission
The process of transferring Mutual Fund investments to a claimant after the investor's death typically takes place within 30 days of submitting all the required documents.
Tax Implications
Any redemptions made or dividends received after the transmission of units will be taxed as per the applicable Capital Gains Tax or Income Tax rules.
This procedure ensures a smooth and legal transfer of mutual fund assets on the death of the investor in India. By understanding this process, investors can make informed decisions about their mutual fund investments and ensure that their loved ones can easily access and manage these assets in case of their demise.
- To minimize the tax implications of capital gains during the transmission of mutual fund investments, it is crucial for the nominee or legal heir to be aware of the applicable Capital Gains Tax or Income Tax rules when receiving redemptions or dividends after the transmission process.
- Given the complexity of the transmission process, it is advisable for investors to maintain and regularly update their mutual fund documents, such as nominee details and KYC information, as part of their personal-finance and investing strategies to facilitate a smooth transfer of assets in the event of their demise.
