Different modes of holding mutual funds
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Synopsis
The mode of holding is crucial for accessibility, management and transfer of mutual funds. In single holding, if the investor dies, heirs must provide legal documents, such as a will or probate, to claim the funds, which can be time-consuming. All you need to know about different modes of holding mutual funds
By ET CONTRIBUTORS
Modes of holding mutual funds
Single holding
Single holding means that the mutual fund investment is owned by one individual. This mode offers simplicity and full control to the investor, making it suitable for independent investors who want complete autonomy over their investments. Only the investor can access and manage the account.
Joint holding involves two or more individuals owning the mutual fund account together. It requires consensus from all joint holders for any transactions or changes, with all holders having access to the account. Transactions typically require signatures or authorisation from all parties. Joint holding is suited for couples, business partners, or family members who wish to manage investments collaboratively.
Either or survivor
The either or survivor mode allows either account holder to operate the mutual fund account independently. Ideal for couples or family members, this mode offers flexibility in management and ensures a smooth transition if one holder dies. Both holders have full access and can conduct transactions without the other’s consent.
Succession
Content courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
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The mode of holding is crucial for accessibility, management and transfer of mutual funds. The primary modes are single, joint, and either or survivor, each with its specific use case and operational nuances.Single holding
Single holding means that the mutual fund investment is owned by one individual. This mode offers simplicity and full control to the investor, making it suitable for independent investors who want complete autonomy over their investments. Only the investor can access and manage the account.
Joint holding involves two or more individuals owning the mutual fund account together. It requires consensus from all joint holders for any transactions or changes, with all holders having access to the account. Transactions typically require signatures or authorisation from all parties. Joint holding is suited for couples, business partners, or family members who wish to manage investments collaboratively.
Either or survivor
The either or survivor mode allows either account holder to operate the mutual fund account independently. Ideal for couples or family members, this mode offers flexibility in management and ensures a smooth transition if one holder dies. Both holders have full access and can conduct transactions without the other’s consent.
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Succession
- In single holding, if the investor dies, heirs must provide legal documents, such as a will or probate, to claim the funds, which can be time-consuming.
- In joint holding, if one holder dies, the surviving holders retain control. However, the process can become complicated if disputes arise among them.
- In either or survivor mode of holding, if one holder dies, the surviving holder gains full control of the account automatically, ensuring a seamless transition and immediate access to funds without the need for legal procedures.
Content courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
