The death of a loved one is always such a tough time, and handling matters related to money is the last thing that anyone needs to be concerned about. When an investor dies, claiming investments in the mutual fund is one of the steps that the family members or legal heirs need to undertake.
Although it’s simple, yet meticulous execution is required so that one does not forget any formality in the process. This article takes you step-by-step on how to claim your investment in mutual funds after the investor’s death.
Types of Claim Scenarios
The procedure for investment in mutual funds varies based on how the account was structured at the time of death of the investor. In a general sense, three leading scenarios are as follows:
Nomination Registered: The process would be easier if the investor has made a nomination of a person or persons because those nominee(s) can claim the units directly.
Joint Holding (Either/Survivor): If the account of mutual fund is held jointly, the units can be claimed by the surviving holder(s) with minimal legal formalities.
Without Nomination or Joint Holder: If there is no nominee or surviving joint holder, then legal heirs must go through a more complicated procedure and provide additional documentation.
Number of Documents
The number of documents depends on the class of claim and whether the mutual fund organization requires some specific documents. However, some common documents are usually asked for. This includes:
Death Certificate: Issued by a competent authority, a certified copy of the death certificate is necessary.
KYC documents of applicant: There must be a valid photo ID wherein applicant must be carrying a PAN card, passport, or an Aadhaar card along with some address proof to get verified.
Bank account details of applicant: There will be a canceled cheque or bank passbook copy to get the funds transferred properly.
Mutual fund statement: The latest statement mentioning the holdings of the deceased may also be kept handy; though usually not required.
Transmission Form: Most mutual fund houses demand that you fill up a transmission form for the same. Such forms are often downloadable from websites of these fund houses.
Claim Process Depending Upon Holding Type
If a nominee was allotted for the mutual fund, then units can be claimed directly by the nominee without much paper work. The following are to be submitted by the nominee:
Certified Death Certificate of the investor.
Identity Proof and address proof of the nominee.
Transmission Request Form for nominees, which is generally available on the website of the mutual fund company.
These documents then undergo verification by the mutual fund company when submitted, and the units are transferred to the name of the nominee. The nominee may now opt to withdraw the units or continue investing.
When the Investment is Held Jointly
For jointly held mutual fund investments with “Either or Survivor” mode of holding, the surviving holder(s) are entitled to claim ownership by way of:
The certified death certificate of the deceased joint holder.
TTM Form Transmission Request Form for joint holdings.
KYC documents of the surviving holder(s), as well as bank account details.
The surviving holder(s) are allowed to transfer the holdings. They then proceed to decide upon the future course of investment.
If There is No Nominee or Joint Holder
In case there is no nominee or joint holder, the legal heirs have to file the claim. The process is slightly more elaborate and involves the following documents normally:
Certified Death Certificate of the investor.
Notarized Affidavit stating the claimant’s relationship to the deceased investor.
Probate of Will / Succession Certificate / Legal Heir Certificate:
Will- If there is a will, the court may need to be approached for getting a probate, depending on the state.
Succession Certificate- If the person who died did not leave behind any will, then the legal heirs may need to apply for a succession certificate from the court.
Legal Heir Certificate- This is a list of the legal heirs of the deceased, and it can be used as an alternative sometimes.
Some mutual fund houses require an indemnity bond from the applicant.
Steps in Claims Process
Notify the Mutual Fund Company: Inform the mutual fund company about the investor’s death and provide account number and other details relating to the deceased.
Submits the listed documents based on the account type and holding pattern.
After a mutual fund company receives all the documents submitted by you, they will then proceed to check them. This verification process can take anywhere between several weeks depending on what complexity there is in the case and the type of claim filed.
Transfer or Redemption of Units: After verification, the mutual fund company will transfer units into the name of the claimant. A claimant may redeem the units or choose to continue holding them in their name.
Additional Points to Consider
Tax Implication: The gains arising from the units of a mutual fund are taxable. In case, you would want an exit by redemption then capital gains tax might apply. The tax incidence shall be determined by the nature of the fund, holding period, and rate applicable at the time of redemption.
Transmission Time Period: SEBI has stipulated that the transmission time period shall not exceed more than 30 days from the date on which all forms and documents are submitted. However, in the case of submission of other documents or discrepancy, there is a delay.
Search for a financial advisor and Lawyer: If the procedure appears difficult to understand, then consult your financial advisor or lawyer as this would especially prove to be necessary if issues of succession certificate or probate of a will are involved.
Conclusion
Claiming mutual fund investments upon the death of an investor requires patience coupled with attention to details and documentation. Understanding the process, putting the necessary papers together, and following the respective steps would ensure that the legal heirs or nominees complete the claim without any problem. Preparedness can minimize hassle at a difficult time and ensure the good transfer of the deceased’s investments to the rightful successors.