Aahana, working in Bengaluru, recently got married and was looking to change her maiden name. She had investments in multiple mutual fund houses and changing the name would require making the name alteration in records of all of them, if she has to carry out redemptions or any other transactions.
Thankfully, the process is simple and straight-forward.
How does it work?
Initially, she has to provide the following documents to a KRA (KYC Registration Agency) or a mutual fund to facilitate the name change:
1. Attested copy of marriage certificate
2. Attested copy of identity proof (PAN, Passport, Voter’s ID, Driving license) with the new name or husband’s name (in passport)
3. Sometimes, ‘No Objection’ letter might also be demanded from all the unit holders
If the name change is not because of marriage but due to other reasons, the investor can submit a proof showing the publication of name change in the official gazette or newspaper advertisement.
These documents will effectively alter the KYC records with the KRA.
Then, the investor needs to write to all mutual funds informing about the name change and share details regarding folio numbers, old and the new name, old and new signatures along with bank or address change, if any.
It goes without saying that name and other related changes have to be made in the bank records as well – especially those bank accounts that are linked to one’s mutual fund account.
As a couple, you might want to be a partner in investments as well. Does the mutual fund allow you to make these alterations?
As of today, most mutual funds don’t allow converting single ownership of units into that of a joint ownership by adding the name of one’s husband. As per AMFI website, addition of a 2nd name or 3rd name in an existing mutual fund account constitutes a ‘transfer’ of assets, requiring payment of stamp duty etc. Moreover, it’s a cumbersome process, requiring you to do such changes in the demat mode as an ‘off-market transaction’ with plausible tax implications.
So, it is advisable to continue holding your existing investments without adding your partners name. Instead, you can add his name as a nominee. Mutual fund investors have the option to add up to three nominees to their existing fund account by mentioning the share of each nominee.
Moreover, if you wish to change your nomination, you could do so anytime by providing a fresh request. It will result in relatively easier transfer of your units to your partner, in case of an unfortunate event.
Mode of holding, what’s better?
There are three modes of unit holding – Single, Joint and Anyone or Survivor.
When you opt for a joint account, you can add up to three names. Here the ownership rights are equal and the joint owners cannot transact unilaterally and the consent of all owners is needed for every transaction. For instance, on redemption, signatures of all the owners are required.
One has to choose a ‘joint holding’ mode at the time of filling the application and by adding names of those who are KYC compliant. Names cannot be added later.
This set-up makes succession a lot quicker as it requires lesser KYC documentation (as it’s already done for all the holders).
In case of Anyone or Survivor, as the name suggests, any of the owners can transact unilaterally. It is a convenient mode of holding as it allows anyone to transact in case of death or illness of any of its co-owners.
In contrast, nominee is just a trustee and not necessarily the legal beneficiary. If one of the joint owners dies, the surviving member becomes its default owners.
What to do?
Usually ‘Anyone or Survivor’ is hassle-free as it allows any of the unitholders to operate without seeking approval from others. Online investments usually belong to this mode by default where there are multiple unit holders.
However, if one doesn’t want a unilateral decision to be made by her investment partner, she can opt for joint ownership.
If you wish to invest jointly with your partner or parents, do so for your fresh investments. In existing investments, the couple can add each other’s name as nominees (changing holding status as mentioned earlier is difficult).
Changing names in mutual fund records is a one-time effort and hassle-free. By choosing the appropriate mode of holding, you can ensure you pass it on to your near and dear ones without a glitch.