There can be an instance when during the course of your investment into mutual funds, you wish to transfer your unit holdings to some of your relative so as to better track the investment or for any other reason. But the rules per mutual fund investment do not allow you to do so and only upon death of the person holding mutual funds can the units be transferred in the name of the nominee.
This too is not affected on an automatic basis and you need to complete the necessary formalities with the companies you have investment in. The nominee other than the death certificate of the deceased mutual fund holder needs to produce his ID documents for verification and bank account details.
So, even upon the death, the investments in the mutual fund units can be continued without the need to sell or re-investment.
The transmission usually takes 5-1d days working days time to be effected.
In a case when the units are held singly and without a nominee
The process of redemption in this case is tedious as apart from the usual documentation some more documents needs to be produced before the fund houses. These are indemnity bond from legal heir or heirs as the case may be, affidavit. Also the requirements are dependent on the redemption amount.