What to do when a joint holder in a mutual fund passes away?

Many investors opt to invest in joint names. A jointly held mutual fund account can be opened with a maximum of three members along with a nominee. It must be noted that all the joint holders must be KYC compliant. This makes it easy to transfer the units in case of an unfortunate demise. While we can do that in a regular mutual fund, it's just an easier and faster way to transfer units since there will be less paperwork.

After the death of the first holder, the rights of the first holder will be transferred to the second holder as he/she will be a part-owner. Only after the death of all holders can the nominee claim authority over the investment. In case there is no nominee, then the investments will be transferred to the legal heirs.

In case of the demise of the first holder, units will be transferred to the surviving unitholder for which the following documents are to be submitted:

• A transmission request form (Form T2) to transfer the units to the surviving unitholders.
• The death certificate of the deceased unitholder in original or photocopy duly attested by a Notary Public or a Gazetted Officer.
• If the PAN card is not provided, a copy of the PAN card of the surviving joint holder.
• A cancelled cheque of the new first unitholder, with the claimant's name pre-printed. Or a new first holder's recent bank statement (not more than 3 months old).
• If KYC is not done, a KYC acknowledgment or KYC form of the surviving unit holder.

If in case of death of all the unitholders, the nominee can claim the units and there are some procedures that need to be followed. For more details, you can check our story on redeeming mutual fund units after your parent's death.

In the case of the demise of all the joint holders, the nominee will have to provide proof to make claims on the investment. He will have to submit an attested copy of the death certificate, along with the following documents:

• Proof of identity of the nominee.
• Declaration and indemnity against any other claim, if the amount is Rs 1 lakh or more.
• A copy of the account statement issued by the asset management company (AMC).
• Bank account details of the new unit holder, along with attestation by a bank branch manager or a cancelled cheque with the account holder's name.
• Know your customer (KYC) form of the claimant.

Suggested read: Joint mutual fund and income tax

This article was originally published on June 07, 2022.