An investor who had been investing in mutual funds for 40 years has suddenly passed away; who will now receive the fund worth crores?

Investing in mutual funds is a long-term endeavor, spanning years rather than just a day or two. If you invest today, you can build a substantial corpus over 40–50 years. However, investors often wonder: what happens to the accumulated funds if the investor passes away unexpectedly?

Will the money go to the nominee, the family, or the legal heir? And what is the process for withdrawing these funds? In reality, there is a specific procedure to transfer the accumulated funds to the rightful person following an investor's death; this is known as the 'Transmission of Units.' Let us understand what this entails and how it works.

What is Transmission?
Transmission refers to the process of transferring a deceased mutual fund investor's units to a nominee, a surviving joint holder, or a legal heir. The mutual fund company (AMC) cannot release funds to anyone without this transmission process taking place. The units are transferred—or the redemption proceeds released—only after this process is completed.

Crucially, the claimant must have updated KYC details. If KYC is not in order, the entire claim process will come to a halt.

What happens if the investment is held jointly?
Many people today invest through joint portfolios with their spouses, children, or other family members. In such cases, two scenarios may arise. If the second or third holder passes away, their name is removed from the folio, and the remaining holder(s) can continue the investment. Conversely, if the primary (first) holder passes away, the second holder automatically becomes the first holder.

To facilitate this, you must submit necessary documents such as the death certificate, PAN card, bank details, and KYC-related paperwork. If the claim amount is up to ₹5 lakh, signature verification by a bank manager suffices. However, for claims exceeding ₹5 lakh, signatures must be attested by a Notary Public or a Judicial Magistrate First Class (JMFC).

**The process is very simple if a nominee is registered**
If you have registered a nominee's name in the folio, the claim process becomes quite straightforward. The nominee simply needs to submit the required documents to either have the units transferred or withdraw the funds.

**What if there is no nominee?**
If no nominee is registered in the folio, the process becomes somewhat more complex. The required documents vary depending on the amount involved.

*   For amounts up to ₹5 lakh, a claim can be made by submitting proof of relationship, an affidavit, an indemnity bond, and a No Objection Certificate (NOC) from other legal heirs.
*   For amounts between ₹5 lakh and ₹10 lakh, a registered will or a legal heirship certificate may be required.
*   For amounts exceeding ₹10 lakh, robust legal documents—such as a succession certificate, probate of the will, letters of administration, or a court order—become mandatory.

**How ​​does the AMC verify the claim?**
Mutual fund companies thoroughly scrutinize every claim to ensure the funds do not end up in the wrong hands. Therefore, submitting accurate and complete documentation on time is crucial. Companies carefully verify all documents, such as the death certificate, bank details, and the will. Additionally, a "cooling-off period" of 10 working days applies after the transmission process is completed; this means the units cannot be redeemed immediately upon transfer.

Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.