In india, mutual fund investments are often made in the form of joint holdings—with one or more individuals as co-investors. These joint accounts can be useful for many reasons, such as family investments or for tax purposes. However, when a joint holder passes away, it can create some complications regarding the ownership of the mutual fund units. In the past, changing or transferring mutual fund units in the name of the surviving holder or the nominee could be a cumbersome process, involving a lot of paperwork and delays.

Recently, the Association of Mutual Funds in india (AMFI) and the Securities and Exchange Board of india (SEBI) have made changes to simplify this process, making it easier for surviving joint holders or nominees to take control of the assets after the death of one holder. Here’s a detailed breakdown of the recent changes and what investors need to know.

1. Changes in the Process: What’s New?

a. Nominee-Only Process for Survivors

Previously, surviving joint holders were required to provide extensive documentation to prove their claim to the mutual fund units after the death of the joint holder. This included:

· Death certificate of the deceased

· Succession certificate (in some cases)

· KYC documents for the surviving holder

Now, AMFI and SEBI have introduced a much simpler process in which nominees can directly claim the mutual fund units. If a nominee has been designated in the mutual fund account, they can easily transfer the units to their name without needing legal heirs or succession certificates.

b. Surviving Joint holder Claims

For accounts where there is no nominee, the surviving joint holder can now process the transfer or change of the mutual fund holdings by submitting a death certificate of the deceased joint holder along with the necessary KYC documentation. This means that the process has been streamlined, eliminating unnecessary steps, which previously involved lengthy waiting periods and legal formalities.

c. Relaxed Documentation

AMFI and SEBI have allowed relaxed documentation for mutual fund transactions after the death of a joint holder. Instead of the traditional demand for a succession certificate or probate of will, the legal heirs or nominees can now simply submit the death certificate along with the appropriate ID proof and KYC documentation for the transfer of units.

2. Key Steps for Surviving Holders or Nominees

Here are the updated steps that the surviving holder(s) or nominee(s) need to follow to make changes after the death of a joint holder:

a. Submit the Death Certificate

· The surviving joint holder or nominee needs to provide an official death certificate of the deceased joint holder. This certificate needs to be issued by the respective municipal authorities or government department.

· The death certificate must be submitted along with the mutual fund service request form to initiate the process of transferring the units.

b. KYC and Identity Verification

· The surviving joint holder or nominee must undergo the KYC (Know Your Customer) process if they haven't already done so. The mutual fund house will need to verify the identity of the claimant.

· KYC documents typically include Aadhaar, PAN card, passport, and bank account details.

c. Submit the Request for Transfer

· After providing the death certificate and KYC documents, the surviving joint holder or nominee must submit a formal request for the transfer of the mutual fund units to their name.

· This can be done by filling out the succession/transfer form available on the mutual fund company's website or through physical submission at the branch or service center.

d. Signature and Verification

· If the surviving holder is making a claim, they must sign the form requesting the transfer. If a nominee is making the claim, the nominee must sign the form.

· Mutual fund houses will also verify whether the nominee’s name was registered with the mutual fund account or not.

e. Completion of Transfer

Once all the necessary documents are submitted, the mutual fund company will process the request and transfer the units to the surviving holder or nominee. The mutual fund units will be credited to the new account holder’s name.

3. Timeline for Processing

The mutual fund houses typically process the request for transferring the units within 7 to 10 working days once the necessary documents (death certificate, KYC details, etc.) are received. The overall process of transferring mutual fund units can take anywhere from a few days to a couple of weeks, depending on the mutual fund company’s internal processes and the documents provided.

4. What Happens if No Nominee Is Registered?

If no nominee is registered and the deceased joint holder is not survived by a joint holder or the surviving holder is unable to claim the units, the legal heirs of the deceased will have to come forward to claim the units. In such cases, the following steps may be required:

· Legal Heir Certificate: In addition to the death certificate, legal heirs must submit a legal heir certificate or a succession certificate to prove their right over the deceased’s assets.

· Will (if applicable): If the deceased joint holder had a will, the legal heirs will need to provide probate or executed will documents to transfer the units.

However, the entire process for the legal heirs is more time-consuming and involves additional paperwork, as compared to a nominee claim.

5. Importance of Registering a Nominee

While the new changes have made the process of transferring mutual fund units smoother for surviving holders and nominees, registering a nominee at the time of investment remains crucial. A nominee acts as the primary person to receive the mutual fund units in case of the investor's death. This avoids lengthy delays and ensures a smooth transfer of assets without legal complications.

Benefits of Registering a Nominee:

· Simplicity: No need for legal heir certificates or succession certificates.

· Speed: Transfer of units can be processed faster (within a few days).

· Peace of Mind: Ensures that the investment goes to the right person without disputes.

6. Conclusion: Making the Process Simpler for Investors

With the recent changes, mutual fund transfer procedures after the death of a joint holder have become much simpler, quicker, and more efficient. The process no longer requires extensive legal documents in most cases, and a simple death certificate and KYC documents can now ensure that the mutual fund units are transferred smoothly to the rightful owner.

Nominee registration plays an important role in ensuring that the process remains hassle-free. Investors are encouraged to update their nominee details regularly to avoid any complications in the future.

For those who hold mutual funds jointly or have family members investing in them, it is a good idea to review and register/update nominees to ensure seamless succession in case of any unfortunate events.

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.