Steps to claiming mutual fund investments after the death of the investor

Steps to claiming mutual fund investments after the death of the investor

1. Understand the ownership structure

The ownership structure of a mutual fund investment determines the process for claiming it. Investors should identify the type of ownership, as it simplifies the process:

• Single ownership: If the mutual fund account was solely held by the deceased investor, then they must follow a different process from a registered nominee account.
• Joint ownership: In the case of a joint account, the ownership gets transferred to the surviving holder(s) without a formal process.
• Registered nominee: If a nominee has been named, they are entitled to claim the investment.
• Without a nominee: If no nominee is registered, the legal heir(s) must provide additional documentation, such as a succession certificate or legal heir certificate, to claim the investment.

2. Necessary documents

The claimant must collect and submit all the necessary documents to claim mutual fund investments. These documents include a death certificate issued by the local municipal authority; KYC documents; identity and address proof, such as Aadhaar, PAN, or passport; and proof that the applicant has a registered nomination.

A succession certificate or legal heir certificate is required if no nominee is registered. In some cases, a nominee may need to provide additional evidence to prevent any disputes.

3. Filing of claim

The process to file a mutual fund investment claim varies depending on the type of nomination and ownership:

• Nominee-registered accounts: The nominee must submit the death certificate along with their KYC documents to the relevant Asset Management Company (AMC) or Registrar and Transfer Agent (RTA), such as CAMS or KFintech. After verification, the mutual fund units are transferred to the nominee's name.
• Joint accounts: If the account is held in "Anyone or Survivor" mode, the surviving holder(s) can approach the AMC with minimal documentation, such as the death certificate. The units are transferred to the surviving holder(s).
• Accounts without a nominee: The legal heir must submit a succession certificate or legal heir certificate, along with a No Objection Certificate (NOC) from other heirs (if needed). The AMC will verify the documents and transfer the units to the legal heir.

4. Redeem or transfer the mutual funds

Once the mutual fund units are transferred to the nominee or legal heir, they have two options. Either they can hold the investments for the future, or they can withdraw the investments if liquidity is required. However, this may attract exit loads and tax implications.

5. Tax implications

Nominees or legal heirs do not incur capital gains tax during the transfer of mutual funds. However, any gain arising after redemption or through dividends is subject to capital gains tax. Whether it is classified as long-term or short-term gains depends on the holding period of the mutual fund units.

6. Professional assistance

Claiming mutual fund investments in the absence of a nominee can involve complex legal and financial processes. Engaging a financial advisor or legal expert ensures compliance with regulatory requirements and simplifies the procedure.

Conclusion

The death of a loved one is an emotionally challenging time, but understanding the steps to claim mutual fund investments can ease the financial transition for the family. Proper documentation, timely communication with AMCs, and professional assistance ensure a hassle-free process.