What Happens to Mutual Fund Investments After the Investor Dies?

Mutual funds are one of the oldest investment products that are highly popular even today. They are especially beneficial when approached as long-term investments. However, what happens to an investor’s units when they pass away?

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Just like a savings account, a mutual fund account provides an option for joint accounts or nomination. Thus, a mutual fund investor can either get their family member to become a joint-holder, or nominate them so that in an event of their demise, their mutual fund proceeds can be transferred to the person. In mutual fund terminology, it’s called transmission.

What’s the basic transmission process?

Although the majority of Asset Management Companies (AMCs) follow the same standard procedure for the transmission of funds, there could be small differences with a few.

In the standard process, the nominee is required to submit the relevant documents as well as a letter requesting the transmission of the units to the AMC. If the investor had mutual funds with multiple AMCs, then the nominee has to follow the same process with each one individually.

What’s the process for a joint holder?

If a mutual funds account was held jointly, then the surviving holder can get the funds transmitted to them. For this, they have to submit a death certificate (either original or a copy that’s attested by a gazetted officer) along with a letter requesting for the transmission.

What’s the process when there is no nomination?

If the mutual fund units were held by the investor alone, and they have not nominated anyone else, then things may get complicated.

In this situation, while the applicant has to provide the standard documents as mentioned above, they have to submit some more, which include an indemnity bond and individual affidavits from their legal heir on a stamped paper.

It’s also worth noting that the person receiving the units may also need to deal with the tax liability of the same.