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MF News How to help the family of deceased client to receive investment proceeds

How to help the family of deceased client to receive investment proceeds

Follow these simple steps to transfer your deceased client’s mutual fund assets to their family.
Shreeta Rege Aug 8, 2018

Most of your clients invest for their family. However, in the event of the unfortunate death of the client, often the family members have to face hardships in receiving the investment proceeds.

As their financial advisor, you need to ensure that you guide the families to expedite the process as the circumstances of each client may be different.  

Typically, any of the following four could scenarios could emerge on the demise of the client

  1. Assets need to be transferred to surviving joint holders
  2. Demise of sole owner or all owners - Nominee is registered
  3. Demise of sole owner or all owners - Nominee is not registered
  4. Demise of Karta of an HUF

While documents required will vary depending on the scenario, some documents are common in all the cases. 

Let us first look at the common documents:

Letter from heir

Submit a letter from the nominee or surviving unit holders or HUF & new Karta requesting the transfer of units to the AMC/fund/registrar. The letter should be in the format prescribed by AMCs.

Death certificate

Submit original death certificate of the unit holder or a duly notarised or attested photocopy of the same.

KYC

Share KYC details such as address proof, PAN number of nominees or surviving unit holders or HUF & new Karta. In case, the nominee is a minor or of unsound mind, you need to submit the KYC of the guardian.

Change in bank details

Nominees have to submit their bank mandate attested by a bank manager or a copy of cheque, which has account number and account holders’ name printed on the cheque. Click here to download the format of new bank mandate details.

Transferring units to surviving joint holder or registered nominee require only these four documents. In case the nominee is not registered or your late client was a Karta of an HUF, you will require a few additional documents.

Demise of sole owner or all owners - Nominee is not registered

In this scenario, you need to submit two additional documents:

  1. Indemnity bond

The indemnity bond absolving the AMC of legal responsibility signed by all legal heirs. Click here to download the format.

  1. Individual affidavits by legal heir

An affidavit signed by all legal heirs requesting transfer units. Click here to download the format.

If the value of holding is below Rs.2 lakh, the heirs just need to attach documents proving their relationship with the deceased client.  However, if the value of the holdings exceeds Rs.2 lakh then they need to attach additional documents such as notarised copy of the probated will or legal heir / succession / claimant certificate by a competent court or letter of administration.

Demise of Karta of an HUF

You need to submit two additional documents:

  1. Indemnity Bond signed by all the co-parceners appointing the new Karta. Click here to download the format.
  2. Notarized copy of settlement deed or deed of partition or decree of the relevant competent court when there are no surviving co-parceners and the holding is more than Rs.2 lakh. These documents are also required in case there is an objection from any surviving members of the HUF.

Note: Karta will receive the investment proceeds

Co-parceners: Co-parceners are only those males who are within 4 degrees in lineal descendent from the common male ancestor (deceased client) and including the common ancestor and the daughter of the common ancestor.

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6 Comments
Anand Kr. Sinha · 2 months ago
Very helpful information and documents. I regularly follow u. Very needful information I get. Thanks a lot
r vasagan arasu · 2 months ago
very use full information, thanks
Srinivasan · 2 months ago
Very useful ready recokner. Thanks
Neeru Seal · 2 months ago
Can you help me out with demise of Primary holder of Senior Citizen Scheme of PSU Bank, if joint holder is not senior citizen.
Srikanth Matrubai · 2 months ago
Very useful article.
In fact, these type of info is available in Google but the manner in which the info has been given is highly appreciable.
The language is very simple and easily understandable.
I have asked my staff to CUT AND PASTE this article on their Pinboard so that they can use them in case need arises
Samuel Asir Raj · 2 months ago
Kindly let me know whether the surviving investor or the nominee need to inform the AMC about the demise of one of the investors, before complying with the other formalities connected to it?
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