The loss of a loved one is never easy, and the intricacies of matters relating to finance only adds to the complexity of the situation during this difficult period of time. The best way to ensure a smooth transmission of financial assets is to start planning for it now.

Recently, Radhika Gupta, managing director and CEO, Edelweiss Mutual Fund, while citing an unfortunate incident, highlighted in a post on social media the importance of continuous ‘documentation’ in order to be prepared before any unforeseen situation or in the event of death.

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“What’s the part of money that we least discuss, but really need to? The part that can make life very difficult if the simple things are not done. Transmission in the event of death,” she wrote in a post on LinkedIn.

However, financial instruments, such as mutual fund (MF) units can be easily transferred to one’s legal nominee in the event of death. Here’s how to go about it.

What Is Transmission?

Transmission is a process wherein the mutual fund units of a deceased unitholder are transferred to the nominee and/or claimant. The claimant could be a second holder, the nominee registered in the folio, or the legal heir of the deceased.

How To Keep Transmission Easy

Document Everything: Create a file of your financial life, from user IDs, passwords to key credentials. Store them safely in a file or a safe digital vault. Ensure that the details of your mutual fund investments can be accessed in one place so you and the family have an overall picture. 

“Banking these days is so complex with accounts and different customer IDs and logins. Make sure that you keep all your information documented and share it with the family. It will be a wild goose chase otherwise,” Gupta wrote in her post.

Liquid Assets: It is also advisable to control the amount of illiquid assets in one’s portfolio. Illiquid assets are those that can’t be sold off easily or may have huge exit costs. Liquid investments on the other hand are easy to access and dispose of or liquidate in case of an emergency.

Update Nominees: It is important to update the nominee details with the financial institutions in the event of change in nominee details.

Says Naresh Bulchandani, CFA, head, products and advisory, Merisis Wealth: “We strongly recommend that our clients update their nominee/s details in all their mutual fund investments in accordance with the Securities and Exchange Board of India (Sebi) guidelines. This acts as a prudent measure in case of unforeseen events like death, along with Will/succession planning that further strengthens the transfer of assets to the designated nominee.

Essential MF-Related Documentation For Nominees

In the case of mutual funds, upon the death of the primary unitholder (in the absence of any other holders, where only the nominee is recorded), the nominee needs to ensure that he/she has proper documentation to claim the transfer.

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These include:

§  Duly filled Transfer Request Form (T3) with a supporting death certificate of the deceased unitholder.

§  Attestation from a public/gazetted officer in case the nominee is a minor and know your customer (KYC) of the nominee (guardian in case of a minor).

§  Self-attested Permanent Account Number (PAN) Card of the nominee (guardian in case of a minor)

Bulchandani adds: “Further, in case of amounts below Rs 5 lakh, the nominee’s (guardian’s in case of a minor) signature attested by the bank manager can be used for transfers. For amounts above Rs 5 lakh, the nominee’s (guardian’s in case of a minor) signature along with that of a magistrate or public notary’s seal with date updated in the transfer request form in the right section has to be provided.”