In an unfortunate case of death, it is Mutual Funds duty to transfer the investment in the name of nominee or survivors. There is a complete laid down process to Distribute or transfer of mutual fund units in case of death. This process is called “Transmission of Units”. it means transferring the holding rights of mutual fund units in case of death of unit holder(s). Today let us see how MFs transfer the investments under various scenarios.
Mutual Funds allow up to 3 Holders & 3 Nominations. These combinations arising sue to death of one or more than one or all holders may lead to complex situations. Hence the transfer of units process is clearly laid down by AMFI or Association of Mutual Funds in India. The process of transmission is same for all MFs accept the forms that they may customize.
The Various Scenario for Transmission of Units may be Required
- The investment is done by one unitholder & he/she dies. Folio has one nominee.
- The investment is done by one unitholder & he/she dies. Folio has more than one nominee.
- The investment is done by one unitholder & he/she dies. Folio has no nomination.
- The folio has 2 Unitholders and First Holder dies.
- The folio has 2 Unitholders and Second Holder dies.
- 3 Unitholders and death of 1st Unit Holder
- There are 3 Unitholders and death of second or third Unit Holder
- 2 or 3 Holders and all die & folio has one or multiple nominations.
- There are 2/3 Holders and all die, There is no nomination.
Complex…? because you are reading all possible scenarios in one go. In reality, only one possibility will arise.
Transfer of Mutual Fund Units in Case of Death
The solution to these scenarios
- The investment is done by one unitholder & he/she dies. Folio has one nominee.
In this situation, nominee is entitled to approach MF. On proving his identity, fulfilling documents try requirements like bank details, suitable KYC, the new folio is generated and investment is transferred in nominees name. he becomes the sole holder. Hem may choose to continue or withdraw investments. In case he chooses to continue investments, he should further nominate using the nomination form.
- The investment is done by one unitholder & he/she dies. Folio has more than one nominee.
Just like in the above case, all nominees approach with necessary documents. Each nominee gets his number of units as per nomination done by original investor. Separate folios are created for each nominee. They can choose to continue or withdraw.
- The investment is done by one unitholder & he/she dies. Folio has no nomination.
In case of death of Sole or All units holders, and if no nominee was registered on the folio, the units are transferred to the claimant/s of the units. Claimant means legal heirs. To establish legal heir one needs a legal certificate by court of law.
- The folio has 2 Unitholders and First Holder dies.
The survivor holders approach MF with the request. A new folio is created and the second holder becomes the first holder.
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The folio has 2 Unitholders and Second Holder dies.
The survivor holders approach MF with the request. A new folio is created and the First holder becomes the Sole holder in the investment folio.
- 3 Unitholders and death of 1st Unit Holder
The living 2 holders will approach the MF with information & request. The second will become first and third holder will become second. A new folio will be created.
- There are 3 Unitholders and death of second or third Unit Holder
In this case, the surviving holder (first) will remain the sole holder. If death is of second holder, third holder replaces him as second holder. If third holder is dead, his name will be deleted from the folio. The first & second holder will remain as it is. No new folio will be created.
- 2 or 3 Holders and all die & folio has one or multiple nominations.
If all holders meet death and folio has the nomination, the nominees have the right to claim the investment. They approach with documents and new separate folios will be opened in name of nominees as per their share of units.
- There are 2/3 Holders and all die, There is no nomination.
The legal heir of all or single holder can approach with legal heir certificate & other documents. Separate folios will be opened in the names of claimants and investment will be transferred in their name.
Documents Required in transfer of mutual fund units in case of death of one of Folio Holders
- Letter from surviving unitholders to the Fund / AMC / RTA requesting for transmission of units.
- Death Certificate in original or photocopy duly notarized or attested by gazette officer.
- Bank Account Details of the new first unit holder as per Annexure I along with attestation by a bank branch manager or cancelled cheque bearing the account details and account holders name.
- KYC & FATCA of the surviving unitholders, if not already submitted.
Documents Required in Case of Death of Folio Holders with Nominee
- Letter from claimant nominee/s to the Fund / AMC / RTA requesting for transmission of units.
- Death Certificate/s in original or photocopy duly notarized or attested by gazette officer or a bank manager.
- Bank Account Details of the new first unit holder along with attestation by a bank branch manager or cancelled cheque bearing the account details and account holders name.
- KYC & FATCA of the claimant/s.
Documents Required in transfer of mutual fund units in Case of Death of Folio Holders without Nominee
Letter from claimant/s to the Fund / AMC / RTA requesting for transmission of units.- Death Certificate/s in original or photocopy duly notarized or attested by gazette officer or a bank manager.
- Bank Account Details of the new first unit holder along with attestation by a bank branch manager or cancelled cheque bearing the account details and account holders name.
- KYC & FATCA of the claimant/s.
- Indemnity Bond from legal heir/s
- Individual affidavits from legal heir/s
- Additional document on the basis of Transmission amount: If the Transmission Amount is less than Rs Two Lakh; then any appropriate document evidencing relationship of the claimant/s with the deceased unitholder/s.
- If the Transmission Amount is Rs Two Lakh or more; then any one of the documents mentioned below:
- Notarized copy of Probated Will.
- Legal Heir Certificate or Succession Certificate or Claimant’s Certificate issued by a competent court.
Letter of Administration, in case of Intestate Succession
Update 29 June 2020: AMFI has made common formats & procedures for all MFs to deal in Transmission or Death cases. You can check this & download forms from here.
AMFI Procedure & Forms Download for Transmission Cases
Hope these answer your queries on transfer of mutual fund units in case of death. Do write to me or share your views using the comments section below.
