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When the first holder of a mutual fund dies, are the units automatically transferred to the second holder? If there is no second holder, does the nominee get the amount or are the units transferred to the nominee? - Biju Paul
Unfortunately, at present, the mutual fund units cannot be automatically transferred to the second holder upon the death of the first unitholder. For the second holder to claim the units, they have to go through a procedure to request the transfer and submit certain documents. They are:
- 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 holders.
- A cancelled cheque of the second unitholder, with the claimant's name pre-printed. Or the second unitholder's recent bank statement (not more than three months old).
- If KYC is not done, a KYC acknowledgement or KYC form of the surviving unitholders.
If there is no second holder and the nominee wishes to get the units transferred in their name, they can do so too. As we mentioned before, there's no automatic transfer option. The nominee has to go through the procedure by submitting certain documents. They are:
- Transmission request form (Form T3): It's a request form to get the units transferred in the name of the nominee or a legal heir. It can be downloaded from here.
- Death certificate: The death certificate of the first unitholder in original. The fund house may settle for an attested copy by a gazetted officer or a notary public.
- KYC documents: A copy of PAN card and address proof of the nominee (or a legal heir) to fulfil the KYC requirements.
- Cancelled cheque: A cancelled cheque of the bank account where the nominee or the legal heir wishes to receive the funds when redeemed.
Once the units are transferred to the nominee's name, they can place a redemption request. The funds would then be transferred to the bank account mentioned in the cancelled cheque.
Suggested read: What to do when a joint holder in a mutual fund passes away?
This article was originally published on December 21, 2022.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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