Guidelines for Acquiring Mutual Fund Assets Upon an Investor's Demise
The process of transferring mutual fund investments to a claimant after an investor's death in India is primarily determined by the presence of a registered nominee or joint holders.
When a Nominee is Registered
If a nominee has been registered, the process is relatively straightforward. The nominee must submit a claim form, the deceased investor's death certificate, and valid ID/address proofs. Upon submission of these documents, the mutual funds units are transferred directly to the nominee's name. This process is designed to be quick and requires minimal paperwork, similar to standardised procedures implemented by banks and financial institutions for the quick settlement of deceased customers' accounts.
In the Absence of a Nominee
If there is no nomination registered or the nominee is not alive, then the transfer is done to the legal heirs or joint holders. Surviving joint holders can claim the units with standard documents like the death certificate. If there are no joint holders or they are not alive, the legal heir(s) need to produce a legal heir certificate or a succession certificate issued by a competent court. The legal heirs must submit these certificates along with the death certificate and other KYC documents to the mutual fund house to get the units transferred.
In some cases, a petition in the district or high court may be necessary for claims without nomination and legal heir certificates. It's important to note that the claimant should ensure all details are kept up to date with the mutual fund company to avoid delays.
Key Points
- The nominee acts as a custodian of the units until final distribution as per the inheritance law.
- If the investor had a will, the process follows the will’s terms and court-issued succession certificates.
- Timelines for settlement by financial entities in India are tightening, with regulatory proposals (like RBI's 15-day rule for banks) aiming to ensure faster settlements.
- The claimant should ensure all details are kept up to date with the mutual fund company to avoid delays.
Summary
If a nominee exists, they can claim the mutual fund units with standard documentation (death certificate, ID proofs), making the process straightforward. If no nominee exists, legal heirs must produce legal heir or succession certificates to get the units transferred, which involves a more formal and potentially longer process.
In addition, bank account details of the claimant, such as a cancelled cheque or attested copy of bank statement/passbook, are needed for the transfer process.
- Investing in mutual funds can result in capital gains, and in the event of an investor's death, the process of transferring these gains to the nominee or legal heir involves submitting necessary documents such as death certificates and ID proofs.
- When it comes to personal-finance management, it's crucial to consider investing in mutual funds and keeping updated records with financial entities, especially the mutual fund house, to expedite the settlement process in the event of an investor's demise.
