How is a mutual fund (MF) investment transferred if the first holder passes away?
If the MF investment is a joint investment, it is transferred to the second holder. If it is not a joint investment, the nominee or the legal heir of the first holder of the investment gets to decide whether to continue or redeem it.
Is this norm applicable to all types of funds?
No, the above procedure does not apply to an equity-linked savings scheme (ELSS). ELSS comes with a three-year lock-in for both lumpsum and systematic investment plans. In case of the death of the first holder, the lock-in is reduced. If ELSS units get transferred, the lock-in gets reduced to one year. So, the nominee or the legal heir will have to wait for one year before selling the units.
If the MF investment is a joint investment, it is transferred to the second holder. If it is not a joint investment, the nominee or the legal heir of the first holder of the investment gets to decide whether to continue or redeem it.
Is this norm applicable to all types of funds?
No, the above procedure does not apply to an equity-linked savings scheme (ELSS). ELSS comes with a three-year lock-in for both lumpsum and systematic investment plans. In case of the death of the first holder, the lock-in is reduced. If ELSS units get transferred, the lock-in gets reduced to one year. So, the nominee or the legal heir will have to wait for one year before selling the units.
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