Mutual funds CAN be transferred to family before death—without demat! Learn the new, simpler process to gift SoA units directly. Avoid inheritance delays & disputes.
Inheritance planning is often fraught with uncertainty. Many believe their legal will guarantees a smooth transfer of assets, but delays, disputes, or legal hurdles can leave loved ones waiting—or worse, empty-handed. Mutual funds, traditionally seen as non-transferable during the holder’s lifetime, have long been a pain point. But here’s the good news: you no longer need to dematerialize (demat) your mutual fund units to transfer them to family members. Thanks to updated processes, transferring Statement of Account (SoA) units is now simpler, faster, and avoids the hassles of demat.
The New Process: Transfer SoA Units Directly
Gone are the days of mandatory dematerialization. Many fund houses now allow direct off-market transfers of physical (SoA) mutual fund units. Here’s how it works:
1. Submit a Unit Transfer Request
Contact the mutual fund’s registrar (like CAMS or KFinTech) or use their online portal.
Fill out a unit transfer form, specifying the recipient’s folio details.
2. Provide Supporting Documents
Proof of identity and address for both parties.
A signed transfer deed (some AMCs require this).
PAN cards of the transferor and transferee.
3. Await Approval
The fund house processes the request (typically 7–10 working days).
Once approved, units move to the beneficiary’s folio without selling or tax implications.
Why This Method Is Better Than Demat
– No Demat Hassles: Skip the lengthy dematerialization and rematerialization steps.
– Retain Flexibility: SoA units are easier to manage for those unfamiliar with demat accounts.
– Lower Costs: Avoid depository fees charged for demat transactions.
When Should You Use This?
– Gifting to Family: Securely transfer wealth to spouses, children, or dependents during your lifetime.
– Avoiding Probate Delays: Bypass legal hurdles that can freeze assets after death.
– Protecting Vulnerable Beneficiaries: Ensure a financially dependent relative receives support without inheritance battles.
Limitations to Note
– Not All Funds Allow It: Some AMCs may still insist on demat for transfers—check with your fund house.
– Tax Clubbing Rules Apply: If transferring to a minor, income from the units may be taxed under your name.
The Bottom Line
This updated process makes it easier than ever to proactively secure your family’s financial future. No more waiting for wills to clear probate or worrying about disputes—just a straightforward transfer of ownership.
Need Help? Reach out to your mutual fund’s registrar CAMS or KFintech.
