How To Transmit Mutual Fund Investments Of Your Parents, As A Legal Heir
Jul 30, 2019

Author: Aditi Murkute

(Image source: Business photo created by katemangostar -www.freepik.com)

The recent demise of an uncle made me think about what happens to the investments, property, etc., once a person passes away.

How is it transferred to the nominee/legal heir?

How can a person claim if there isn't a nominee appointed?

I had a discussion with my senior colleagues and the following points explain how one can redeem/ transfer mutual fund units after the death of one's parents.

The very first step is to get a Death certificate and make multiple copies.

A death certificate is the most important document to claim for any settlement, transfer of assets, account closure, and so on. So, keep multiple copies of the death certificate of your parent and get the copies attested.

Please ensure that the name of your parent is spelt correctly and is as per the official documents such as PAN card and Aadhaar and so on. If there is a discrepancy, it could take more than a month to sort the name change issue and this might add to the stressful situation.

  1. Gathering all Documents and keeping it handy.

    Gather all the documents. Create a list of all the bank accounts and check if there is a joint holder or a nominee appointed. Keep a note of all bank fixed deposit documents, bank / other financial accounts, and all the investments.

    Keep all bank account details of the deceased unitholder and get it attested by a bank branch manager or use a cancelled cheque/bank account statement/passbook bearing the account details and account holders name.

    Also, the claimant needs to submit his/her KYC details.

    [Read: 5 Easy Steps To Become KYC Compliant]  

  2. Check if there is a will made and/or a nominee appointed

    If your parent had appointed a nominee or has written a Will, it will simplify the transfer/withdrawal process.

    A Will or testament is the legal document of the deceased's intention, the testator, with respect to property that he/she desires to be passed onto after death.

    [Read: 10 Points to consider while writing a will]

    The nomination is a facility that enables you, an individual unitholder, to nominate a person who can claim the transfer of your Mutual Fund Units thereof in the event of your death. But nominee is just a trustee of these assets and does not have legal rights on them.

    [Read: Mutual Fund Nominee Registration - Everything You Need To Know]

    If you are registered as a nominee and a legal heir making a claim on behalf of your deceased parent, then you should keep your KYC details handy. Even if you are one of the joint surviving unit holders, do keep your KYC details handy.

    Hence, if your parent has not prepared a Will nor appointed a nominee, then you will need a Succession certificate. This is valid only for movable assets. This can be obtained from a district court.

    For immovable properties, the succession rule as per the religion or country's law is applied. And the assets will be distributed among all the legal heirs.If the claimant is not registered as the nominee, then you will require the following additional documents as well.

    • Indemnity Bond from legal heir/s

    • Individual affidavits from legal heir/s

    • If the transmission amount is below Rs Two lakh: any appropriate document evidencing relationship of the claimant/s with the deceased unitholder/s.

    • If the transmission amount is Rs Two lakhs or more: Any one of the documents can be kept (Notarised 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)

    Hence, it is very important to write a Will. It ensures that your assets are passed in accordance with your wish.

  3. Informing the mutual fund house and other financial institutions

    After the demise of your parent, you inform the insurance company immediately for swift reimbursements. Similarly, it is equally important to inform other financial institutions like banks, broking companies, and the Fund / AMC / RTA for the redemption of units or close the account or transfer the units.

    Usually, a letter is submitted including the necessary required documents by the claimant/joint unit holder/nominee informing about the original unit holder's death and to start the procedure at earliest.

    Also, ask the concerned person at these institutes for a requirement of witnesses to complete these formalities.

  4. Final redemption/ transfer complete

    Please remember to submit relevant forms as Annexure I, mentioning about the bank details with attestation from Bank Branch Manager.

    If you are not registered as a nominee, then you will have to fill, Annexure III- Indemnity Bond from all Legal Heir/s Confirming Claimant/s with respect to Transfer of the Mutual Fund Units held by the Deceased Unit Holder without production of Legal Representation.

    Please note that every institution has its own procedures for transfer/liquidation of assets. And each of them would have different timelines as well. Hence, start your claim and transfer procedures at the earliest.

    All submitted documents must be in original and/or photocopies should be attested by a gazetted officer, SEM, magistrate, or a person of local standing.

Sum-up:

It is difficult to think about making claims or getting units transferred when you have lost a parent or family member and you are grieving. But remember, it is equally important to clear off with these formalities as earliest as possible. Keep all the important documents in a safe and secure manner.

[Read: Are You Storing Financial And Other Documents Wisely?]

  • Don't turn a blind eye, delay, or panic. Follow all procedures.

  • Ask relevant questions to understand better and meet in person for proper guidance to know about the procedures to follow.

  • If your parents have made a Will, the process is simplified, so do check for it.

  • Appoint an advocate for the legal paperwork if your parents haven't appointed a nominee or made a Will.

  • Do ensure to keep family in the loop.

  • Lastly, you do need to do succession planning for assets, mutual funds, etc. Take the time to leave behind a legacy that takes care of your loved ones, emotionally and financially.



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