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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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.
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.
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:
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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:
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:
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:
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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