Introduction

Losing a loved one is emotionally draining, and managing their financial assets through mutual fund investment could add more stress. However, you can deal with this situation more easily with precise knowledge of the claims process. This article will take you through a few simple steps to learn how to claim mutual fund investments as a nominee, joint holder, or in the status of the legal heir per concretising the transfer of ownership smoothly.

Step 1: Identify the Type of Holding

Mutual fund investment should be claimed according to the mode of holding. Firstly, you will have to ascertain whether it was:

1. Single Holder with Nominee: The nominee may claim the investment if the mutual fund investment has a registered nominee.

2. Joint Holders: The ownership will be transferred to the surviving holder.

3. Single Holder with No Nominee: In that case, the legal heir or successors should claim the investment.

Each of these requires separate documentation requirements and procedural formalities.

​​​​​​​Step 2: Collect the Necessary Documentation

You should submit certain documents concerning the AMC mentioned earlier to claim mutual fund investments.

Documents for Nominee:

If you are a nominee, the process is usually straightforward. Prepare to give the following:

• Transmission Request Form (available on the AMC’s website or office)

• Death certificate of the deceased investor (original or notarised copy)

• Your KYC documents (identity proof, address proof)

• As proof of ownership of the bank account into which this investment will be transacted, please submit a cancelled cheque or bank statement.

Documents required for Joint Holders:

Where it is a case of a joint account, the surviving account holder should give:

• A transmission request form

• The death certificate of the deceased account holder

• KYC documents of the surviving holder

Documents required for Legal Heirs in cases with no nominee:

If no nomination is registered, in addition to KYC documents, legal heirs must provide additional documents:

• A court-issued succession certificate

• A legal heir certificate or a duly attested affidavit of heirship

• Indemnity bond wrapped in favour of the AMC to guard against future claims

• A no objection certificate from other legal heirs

Completing all documents in order is essential; otherwise, things will become hard and can slow down the process.

Step 3: Contact the AMC or Registrar

Now that you have collected the required documents contact the AMC or the mutual fund investment registrar. Some of the popular registrars in India are CAMS and KFintech. Report the claim and ask for help in providing the required paperwork.

Most AMCs permit the submission of documents either in person or online through their portals.

Step 4: Submission and Verification

Once you have uploaded the necessary documents, your AMC will start the application verification process. This stage authenticates the veracity of your submission and the attached documents.

• Provided everything is in order, the transmission will usually be processed within a few weeks.

• However, there will be issues if there is any discrepancy or if any documents are missing, in this case, the AMC will notify you to that effect, so ensure that you are always ready to reply promptly.

Step 5: Tax Implications of Transmission

Awareness of the tax implications associated with claiming mutual fund investments is essential.

1. Capital Gains Tax: If the mutual funds are later redeemed or sold, the recipient (you) must pay capital gains tax based on the original investment date and value.

2. Inheritance Tax: India does not have an inheritance tax; therefore, the transmission of mutual fund units is not taxable.

You can plan for the claim's financial implications if you understand these.

Special Cases

Claiming Investments When There’s No Nominee or Heir Certificate

In cases where no nominee is registered and legal documents like a succession certificate are unavailable, you may need to approach the court to obtain the necessary certificates. This can be time-consuming and involve legal fees, so starting the process early is wise.

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Division of Investments Among Multiple Heirs

If multiple legal heirs are entitled to the investments, the units may be divided equally or according to the terms agreed upon by all parties. All heirs are supposed to provide a NOC, and the AMC may demand additional legal documentation to guarantee fair distribution.

Preventive Measures for Hassle-Free Transmission

As you address the claims process, consider putting in measures that will help avert similar predicaments in future:

1. Choose a Nominee: Ensure your mutual fund accounts always have a registered nominee. This will smoothen the transmission process and help eliminate litigation.

2. Keep Documents Updated: Bi-annually review your KYC details and nominee information.

3. Organisation of Records: Organise and provide access to all investment-related documents, such as account statements and folio numbers.

Conclusion

While claiming mutual funds investment after an investor's death appears to be a complicated proposition, following due process and producing appropriate documents would ensure a smoother and hassle-free handling. If you are a nominee, a joint holder, or a legal heir, being aware of the procedures and having the requisite knowledge about taxation would greatly help you effect the transmission smoothly enough.

Remember, proactive financial planning, such as appointing nominees and keeping documents in order—can save significant time and effort in the future. If you’re unsure about any aspect of the claim process, don’t hesitate to consult a financial advisor or legal expert to guide you through the journey. By taking the proper steps today, you can safeguard your loved ones’ financial future and honour the investments made by those who are no longer with you.

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