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Investors use mutual funds to reap the rewards of their disciplined savings and investments. But their unfortunate demise can unsettle the whole planning. Here’s a low-down on the procedural aspects of transferring units to a claimant upon the death of a unit-holder.
Upon nomination
The registered nominee obtains the right to the units only upon the death of the unit-holder. If the account is held jointly, then the nominee obtains the right only after the death of all joint unit-holders. If there are multiple nominees, each nominee would get his/her share in a way indicated by the unit-holder. If the allocation/share for each of the nominee is not specified, the fund house shall settle equally among all the nominees.
To claim the units after the death of a unit-holder, the nominee has to submit the following documents to the fund house -- transfer request form (Form T3); death certificate of the deceased ; copy of PAN and KYC form of the nominee; bank statement/passbook or cancelled cheque of the nominee.
If the transmission amount is up to ₹2 lakh, the nominee’s signature attested by the bank manager as per Annexure-Ia will be required. Otherwise, nominee’s signature shall be attested by specified persons including notary public. If the nominee is a minor, a copy of his/her birth certificate and PAN of the guardian is needed.
In the event the nominee dies before the unit-holder, the nomination automatically stands cancelled. In case of multiple nominations, if any of the nominee is deceased at the time of death claim settlement, the said nominee’s share will be distributed equally among the surviving nominees.
Claim by a legal heir
If nomination is not made by the unit-holder, the units would be transferred to the account of the legal heir(s). The legal heir could be as per the Will left behind by the deceased. If there’s no Will, the legal heir as per the applicable succession law will be eligible to claim the units .
The documents to be submitted by the legal heir include,besides the above mentioned, , a document proving relationship of the claimant with the deceased, such as notarised copy of probated Will or succession certificate issued by a competent court or letter of administration or a court decree, in case of intestate succession. Affidavits by all legal heirs, as per in annexure-III, also needs to be submitted.
If the transmission amount is less than ₹2 lakh, and the legal heir is not able to submit any legal document proving that he/she is a legal heir, then a bond of indemnity for the mutual fund as per annexure-II, and an NOC (No-Objection Certificate) from other legal heirs, as per annexure – IV, can be submitted to claim the units. The transmission request form (Form T3), annexure- Ia, II, III and IV is available at https:// tinyurl.com/mftransfer1
If the nominee mentioned by the deceased unit-holder is not the legal heir, the former becomes just an agent holding the funds “in trust” (as a caretaker) for the benefit of the latter. A legal heir is a person who is the actual owner of the assets of the deceased, says Neha Pathak, Head of Trust and Estate Planning, Motilal Oswal Private Wealth Management.
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