How to Claim Mutual Fund Investments After the Death of the Investor

Dealing with the death of a loved one is difficult. The last thing their family should worry about is stuck money in investments. Thankfully, Indian law and securities regulation provide a legal process called transmission that allows mutual fund units of a deceased investor to be transferred to nominees or legal heirs. In 2025, especially with SEBI’s revised nomination rules, this process has become smoother when proper nomination is in place. Below is what one needs to know – who can claim, what the current rules require, how to go about it, and what documentation is necessary.

Who Can Claim Mutual Fund Units When the Investor Dies

There are three main kinds of possible claimants:

1. Registered Nominees - If the investor had registered one or more nominees, those persons are first in line to claim the units (after the investor’s death). The nominee helps transmit the investments, subject to certain formalities, to their name.
2. Joint Account Holder(s) - If the investor held the mutual fund account jointly with someone else, after the death of one holder, the surviving joint holder(s) can claim the units (if joint account terms allow).
3. Legal Heirs - If there is no valid nomination, or if all joint holders and nominees are deceased or uninterested, then legal heirs (as per will, or if none, as per law of succession) can claim ownership. This often requires more documentation and legal validation.

Key Regulatory / Nomination Rules as of 2025

These are the up-to-date SEBI / regulatory rules that affect how nominees & transmission work:

• Investors can now have up to 10 nominees in mutual fund folios and Demat accounts. This is a change from the older limit.
• For accounts held in a single name, nomination is mandatory unless the investor opts out explicitly.
• The nomination form must now capture more complete information: full name of nominee, relationship, contact details (address, mobile number, email), share allocation (percentage) among nominees, identity proof (such as PAN, Aadhaar (or last 4 digits), driving license or passport number).
• There is flexibility: investors can update, change, or remove nominations multiple times.
• If a nominee is incapacitated, there are provisions under which the investor can authorize a nominee to operate the account or folio under certain conditions.
• SEBI also eased some requirements so that, for transmission to nominees, fewer documents are needed (for example, just a self-attested death certificate, KYC updates of nominee etc.).

How to Claim / Transmit Mutual Fund Units: Step-by-Step

Here is the general process a claimant should follow in 2025, given the updated rules:

• Determine who is eligible: Check if a nominee is registered for that mutual fund folio, or whether there are joint holders, or whether legal heirs need to step in.
• Gather required documents: Depending on which category you fall under (nominee, joint holder, legal heir), collect appropriate documents (see below in “Required Documents”).
• Complete transmission / claim form: Mutual fund houses / their registrars provide a Transmission Request Form or equivalent. Fill in details of the deceased, the claimant, folio number / scheme, number of units, etc.
• Submit the claim: Hand over the form + documents to AMC (Asset Management Company) or the RTA (Registrar & Transfer Agent). Ensure all details are correct and KYC for claimant is updated.
• Verification by the AMC / RTA: They will verify the documents, validate KYC of claimant, ensure nomination status etc., check if there are any liens or pledges against the units.
• Transmission of units: Once everything is accepted, the units are transferred / transmitted to claimant’s name. This is not redemption or sale; ownership changes but units continue.
• Redemption / usage: After transmission, the claimant (new unit‐holder) may redeem or continue as per their wish. Then tax rules for capital gains will apply as usual when redemption happens.

Documents Required

The documents needed for transmission of mutual fund units in 2025 depend on whether the claimant is a nominee, surviving joint holder, or legal heir.

1. Nominee (registered nominee): A nominee generally needs the death certificate of the deceased investor (self-attested or certified), a completed transmission request form, KYC proof such as PAN or Aadhaar, bank account details in their own name, and updated identity/contact information (address, mobile number, and email). In some cases, the AMC may also ask for updated KYC.
2. Surviving Joint Holder(s): The surviving joint holder(s) should submit the death certificate of the deceased holder, their updated KYC (if not already done), proof of joint holding, and the transmission form provided by the AMC or RTA.
3. Legal Heirs (when no valid nomination exists): Legal heirs must provide the death certificate of the investor, their own KYC documents, and valid succession papers such as a Will with probate or a Succession Certificate. In addition, they may need a no-objection certificate from other heirs (if there are multiple), an indemnity bond or affidavits as required by the AMC, and their bank account details for credit of units.

What Happens If There was No Nominee Registered?

• The process then goes through legal heirs. Heirs must provide legal documents to establish their right (Will or death of nominee / all joint holders, etc.).
• AMC or RTA may require more documentation such as a succession certificate or probate in case of high value holdings.
• Share among legal heirs will follow the law of succession (or instructions in the Will, if valid) when dividing the units.

Tax & Legal Implications

• Transmission is not a taxable event: Merely transferring ownership (from investor to nominee or heir) does not trigger capital gains tax.
• When the new holder redeems or sells units, normal capital gains tax rules apply depending on how long the units were held and type of scheme (equity‐oriented, debt‐oriented, etc.).
• Legal heirs should maintain proper records of date of acquisition, number of units, etc., for computing gains when they redeem.

Why Nomination Matters More Than Ever

Given the updated regulations, the importance of nomination is much higher:

• It simplifies and speeds up transmission process after death.
• Reduces legal hassle & paperwork.
• Helps avoid disputes among heirs.
• Regulatory mandates ensure that single named folios must either have nomination or formal opt-out, to avoid ambiguity.

Thus, keeping nominee details updated, ensuring identity and contact details are correct, and being aware of the share allocation among multiple nominees are small tasks now, but hugely helpful later.

Sample Scenario

Imagine Mr. Ramesh has mutual fund investments in his name alone. He nominated his wife (50%) and two children (25% each). He ensured full details for all in nomination form with identity proof, contact details etc. He also updated bank and KYC details. When he passes away:

• The nominees will submit death certificate, their own KYC, bank account proof and the transmission form.
• Units will be transmitted to their names in the allocation he specified (50% wife, 25% each child). No legal heirs need to produce wills unless someone contests.

On the other hand, if Ramesh had no nominee, then his legal heirs (wife, children) would have to provide succession or probate documentation, affidavits, and perhaps no‐objection certificates, which takes more time.

Conclusion

Transmission of mutual fund units after the death of the investor is a well-defined legal process in India. Thanks to the revised SEBI nomination rules in 2025, the transmission to nominees is much more streamlined when the investor has followed nomination formalities fully. But where nomination is missing or unclear, legal heirs will still need to show their entitlement via legal documentation.

To prevent delays and reduce stress for your loved ones, every investor should:

• Register a nominee (or opt out formally if you must).
• Update nominee details (identity, contact, share allocation) when life circumstances change.
• Keep KYC, bank account and folio documentation up to date.
• Inform family where the investment details / account folio numbers are stored so they can initiate transmission when needed.