When units get transferred to the surviving members in case the first holder dies, it is called transmission of units. Transmission is merely a change in the unit holder pattern.
The need to transmit mutual fund units arises in case of the unit holder’s death. It is a relatively easy process if the documents are in place. If there are units across a number of fund houses, these requests have to be submitted to each fund house.
If the first holder passes away, the units can be transmitted to the second holder. In case there is only one holder, the units can be transmitted to the nominee.
The second holder or nominee will have to submit a letter informing about the death of the first unit holder, along with the death certificate, KYC FATCA details and bank account number.
Some fund houses insist that the bank details of the second holder be certified by the bank concerned.
If there are surviving unit holders, the fund house will not ask for any legal documents other than the ones mentioned above. But when nominees stake a claim to the investment, the fund house will ask for some legal documents. In addition to the above documents, the nominee needs to provide an indemnity certificate. Each fund house may have a different format for this certificate.
The process could be completed fairly smoothly if the documents are in order. On receipt of necessary documents, the fund house could take about as 5-10 working days to get the transmission done.
Many investors buy mutual fund units in demat form through stock exchanges. In the event of death of one of the joint holders, the mutual fund units will be transmitted to the surviving holder. One needs death certificate and an account closing form. The new account where the mutual fund units need to be transmitted must be in the same sequence as the surviving holder/holders. If such an account in not available, the surviving unit holder will need to open a new depository account.