My father had invested in mutual funds in which my mother was enrolled. I have lost my parents and I want to broadcast them in my name. My question is – can this mutual fund be transferred to a Hindu Undivided Family (HUF)?HUF) which I have created to reduce the tax liability?
—Name withheld on request
We have assumed that both your parents have died in an intestate (ie without executing a will). We assume that your father was the sole owner of the money invested in the mutual fund. Therefore, the transfer of your father’s property (i.e. Mutual Fund) shall be governed by the rules of intestate succession under the Hindu Succession Act, 1956 (the “Act”).
We assume that your mother passed away before your father. Since you are the sole surviving heir of your father, and in the absence of a surviving nominee, the money invested in mutual funds will be transferred in your favor as per the rules of intestate succession under the Act. This will be obtained by obtaining letters of administration from the jurisdictional court. Alternatively, you can also consider obtaining a succession certificate from the jurisdictional court.
A succession certificate is issued to the heirs of the deceased, who have died to represent the deceased for the purpose of their estate. Usually, such a succession certificate is the primary document through which the heirs can claim the property of the deceased. Bank accounts, securities, mutual funds, etc. Obtaining a succession certificate is a fast and convenient way to transfer or withdraw money invested by your father from mutual funds.
However, it is important to take into account the preference of your bank. It is advised that you check which option (i.e. letter of administration or succession certificate) is suitable for your bank.
We assume that you are the Karta of HUF. Hence, once the Mutual Fund is in your name, it can be transferred to the HUF as a gift. The said asset will then be reflected in the HUF account.
The question was answered by Rishabh Shroff, Partner, Cyril Amarchand Mangaldas. Questions and thoughts at mintmoney@livemint.com
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