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My son expired and as joint holder, mutual fund units were inherited by me. Now I want to gift mutual fund units to my son's children. Is it possible? If not, what is the best way to transfer? - Anonymous
If you're wondering whether you can gift mutual fund units to your grandchildren, the answer is no. Mutual fund units cannot be gifted or transferred. This means you cannot gift the mutual fund units you got as a joint holder of mutual funds to your grandchildren.
However, there are ways you can invest in mutual funds for your grandchildren. Here's how:
Make investments in their names
To invest in mutual funds for your grandchildren, you must first redeem the mutual fund units you wish to give. If your grandchildren are over 18 years of age, you can redeem your existing investments and transfer the proceeds to their bank accounts. After this transfer, your grandchildren can start their investments in mutual funds using their own bank accounts.
If your grandchildren are under the age of 18, their mother or a court-appointed legal guardian can serve as their guardian for those investments.
Designate the grandchildren as nominee
An alternative to investing in grandchildren's names is to continue investing in your own name and designate the grandchild as a nominee. This means that the mutual fund units will be transmitted to the grandchild in case of the unfortunate demise of the unitholder.
In conclusion, while you cannot gift mutual fund units to your grandchildren, you can invest in mutual funds for them by following the above methods.
Also read: Is a monetary gift received from parents taxable?
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