Procedure To Claim Mutual Fund Money Upon Death Of An Investor

Mutual fund is the most popular way of investment and wealth creation. The mutual fund market has its own set of rules and guidelines, defining the various procedures like buying of mutual fund units, fees, trade and settlement dates and selling of the mutual fund units. Much has been written and known on the above mentioned points.

However, there is some ambiguity and lack of awareness on the process of claiming money on death of a mutual fund investor. The article is an attempt to discuss, who can claim the units in case of the unfortunate demise of an investor and the time taken to claim the money.

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Procedure To Claim Mutual Fund Money Upon Death Of An Investor

Who can claim the investment?

As per guidelines of mutual funds, the nominee, a legal heir or a joint holder can claim the mutual fund investment, in the event of death of the investor. This process is called transmission and the surviving holder needs to furnish the death certificate of the investor and an account closing form to claim the mutual fund investment.

Documents required to claim mutual fund:

There are certain documents that must be submitted in order to claim the mutual fund corpus, in case of demise of the primary investor. The claim process starts with submission and verification of these documents.

• Photocopy of the death certificate of the deceased investor.
• A letter requesting the transfer of the mutual fund units.
• A cancelled cheque with the account holder’s name and account number
• The banks mandate on the bank letterhead
• KYC proof of the nominee or the legal heir
• FATCA self-certification

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Claim process with nomination:

If the mutual fund units are held by a single person with a nominee, then the nominee can either opt to redeem the units or transfer the units in his/her name in case of death of the mutual fund investor. To move ahead with the claim process, the nominee must submit some documents that serve as proof of the event.

However, separate claims have to be made at each mutual fund house, where the deceased had investments. In case the units belong to a single AMC, then a single claim is sufficient. The following documents need to be submitted to file a claim for the mutual fund units:

• An original/ copy of the Death certificate attested by the bank manager/ gazetted officer.
• Bank account details of the nominee or a cancelled cheque with the name of the nominee.
• KYC of the nominee.
• PAN card.

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Mutual fund Claim process without nomination:

In case the mutual fund units are held by a single person without a nominee, then the process of acquiring the mutual fund units will take a little more time and paperwork. As the investor has no registered nominee, the claim will be processed once the nominee submits the following legal documents along with the above mentioned documents:

• Indemnity bond signed by all legal heirs confirming the claimant
• Individual affidavit from the legal heirs
• If the claim is above a certain threshold limit, then the nominee must submit a notarized copy of the WILL of the investor or succession certificate.

Mutual fund Claim process for joint holders:

In case the mutual fund units are held in joint names, then upon the death of one of the holders, the shares can be transmitted to the name of the other holder. The surviving holder then becomes the sole holder of the shares.

However, it is then mandatory for him/her to name a nominee. When the units get transmitted, the surviving holder has no tax liability. Tax will be charged only on redemption of these units. The surviving holder must submit the following documents to transmit the mutual fund units to his name:

• A letter requesting the transfer of the mutual fund units.
• An original/ copy of the Death certificate attested by the bank manager/ gazetted officer

Transmission in case of HUF, due to the death of Karta:

In case of demise of the existing Karta, the members of the Hindu Undivided Family, HUF, can nominate a new Karta and submit the following documents for the transmission process:

• A letter requesting/ mentioning the change in Karta. The letter must be signed by the new Karta.
• Death certificate of the previous Karta attested by the bank manager or gazetted officer
• Identity proof of the new Karta
• Indemnity bond signed by all the surviving coparceners and the new Karta.

How much time does it take to make the claim?

The process of submitting the documents, verification of the documents and settling the claim, takes around 15 days in total, provided the documents submitted are completely authentic and relevant.

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