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If you are reading this, there is a high chance that you know about mutual funds or have already invested in mutual funds. Mutual funds are investment vehicles that pool investors’ money together and invest in a diversified portfolio of securities, such as stocks, bonds, and other assets. One key aspect of mutual fund investing is the nomination process. This is the process that allows investors to designate a person or entity to receive the benefits of their investments in case of their untimely demise.

However, we have seen many instances where investors may fail to nominate a person to receive their mutual fund holdings after death. Moreover, they might need to remember to update their nominee details after marriage. This can lead to various complications and legal issues, as the distribution of the deceased investor’s assets may be subject to lengthy legal battles or delays. In such cases, the mutual fund company may be required to freeze the investor’s account until the rightful heirs are determined, resulting in a loss of investment opportunities and potential gains.

In this article, we will look at the steps you need to take to claim the mutual fund units when there is no nomination so that mutual fund investments are seamlessly transferred to you after the death of your loved one.

Here are the documents that you will need to make a claim:

1. Transmission Request Form (Form T3) for Transmission of Units to your account
2. Death Certificate of the deceased unitholder(s) in original or photocopy duly attested by a Notary Public or a Gazette Officer.
3. Copy of PAN Card or guardian if the claimant is a minor.
4. KYC Acknowledgment or KYC Form of the claimant. In the case of a minor, the claimant form of the guardian will be required.
5. Cancelled cheque with your name pre-printed or a copy of your recent bank statement or passbook. It should not be more than three months old.

In addition to these documents, you will need to take care of a few formalities depending on the amount of money you are claiming. The process is a little easier if the amount is less than ₹ 2 lakhs.

Here are additional requirements if the transmission amount is up to ₹2 Lakh:

1. The Bank Manager needs to verify your signature, as indicated in Annexure-Ia. In the case of minors, the guardian’s signature must be verified (for an account in the minor’s name or a joint account with the guardian).
2. Any appropriate document that indicates the relationship between you and the deceased investor.
3. As per Annexure-II, Bond of Indemnity needs to be provided by all legal heirs to transfer ownership of units without a legal representative. However, the bond of indemnity is not required if you submit the Succession Certificate or Probate of Will or Letter of Administration where you are named as a beneficiary. In this case, an affidavit as per Annexure-III is sufficient.
4. Each legal heir must submit an individual affidavit, as stated in Annexure-III, to be recognized as an heir.
5. The NOC from other legal heirs as per Annexure-IV should also be provided, as applicable.

Now, if the transmission amount is more than ₹2 lakhs, in that case, you need the signature on the transfer to be attested by a Notary Public or a Judicial Magistrate First Class (JMFC). If the claimant is a minor, then the signature of the guardian needs to be attested.

In addition to that, individual affidavits need to be given by each legal heir along with a notarised copy of the probated will or succession certificate or letter of administration or court decree in case of Intestate Succession.

So, it is best to nominate the right person so that your beneficiaries don’t have to undergo all these tedious processes. And, if you are the heir, you can request them to check if they have nominated the right person and revise it if it needs to change.

Recently, the market regulator, The Securities and Exchange Board of India (SEBI), has made a new rule which states investors should submit a nomination or give a signed declaration to opt out of the nomination. This option will be available to investors who subscribed to mutual fund units on or after August 1, 2022. The folios will be frozen for investors who don’t comply with it. The deadline for this exercise is March 31, 2023.

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