You raise an interesting question about the transferability of mutual fund units. As per current regulations in India, mutual fund units can’t be directly transferred to another person, even if that person is a close family member like your son or daughter.
There are a few ways to achieve what you want. You could:
- Change the ownership through nomination: You could appoint your son or daughter as a nominee for your mutual fund holdings. In the event of your unfortunate demise, the nominee can claim the units. They would need to submit necessary documents, such as a death certificate, to the respective mutual fund house for the same.
- Joint Ownership: You could also add your son or daughter as a joint holder in your mutual fund investments. This is particularly useful in terms of estate planning.
- A gift through redemption and reinvestment: Another way would be to redeem your mutual fund units and then gift the proceeds to your son or daughter. They can then use this money to invest in mutual funds in their own name.
Remember, there may be tax implications and an exit load based on the type of fund and holding period in cases of redemption. Also, when appointing a nominee or adding a joint holder, it’s crucial to make sure that the person is aware of the responsibilities that come with owning mutual fund units.
Do consult a financial advisor to understand the best method suited to your specific situation and the potential tax implications involved.
