A Nominee, a Survivor and a Frozen SIP Account
Mr. and Mrs. Nair held 42,000 units of a balanced advantage scheme, worth about Rs 9.1 lakh, in a joint folio opened in 2011 with the holding mode recorded as 'either or survivor'. A nomination in favour of Mr. Nair's younger brother, Mr. Suresh, was registered in 2015 on a form signed only by Mr. Nair. Mr. Nair died on 4 January 2025. On 20 January three items reach the RTA on the same day: (a) Mrs. Nair's request to delete the deceased holder's name and to update her bank mandate and nomination; (b) a transmission claim from Mr. Suresh relying on the 2015 nomination; (c) an impending auto-debit of Rs 10,000 under a SIP registered against Mr. Nair's sole bank account, which the bank has frozen pending succession. Mrs. Nair's KYC is validated. Mr. Suresh's KYC is not current. The scheme has no lock-in and no exit load.
1. Is Mr. Suresh entitled to the units? Analyse the holding mode, the nomination and the effect of the death.
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Mr. Suresh is not entitled. Three independent reasons, each sufficient.
Holding mode. In an 'either or survivor' folio, the surviving holder takes the units absolutely on the death of the other. The units do not fall into the deceased's estate and no transmission is required; only the deceased's name is deleted. Had the mode been 'jointly', both signatures would have been needed for transactions and a transmission process would be required on death; had it been 'anyone or survivor', the survivor could operate but the succession outcome would be similar.
Validity of the nomination. A nomination in a jointly held folio must be made by all the holders. A form signed only by Mr. Nair does not constitute a valid nomination for the folio, so the RTA's record of 'nominee: Suresh' is itself defective and should be corrected.
When a nomination operates. Even a valid nomination operates only on the death of the last surviving holder. While Mrs. Nair is alive, the nominee has no right, title or interest in the units.
Action. Reject Mr. Suresh's claim in writing, citing the holding mode and the invalidity of the single-signature nomination. Mr. Nair's estate likewise has no claim. Record the rejection and the reasons in the folio and retain copies of the death certificate and correspondence.
2. Set out the process the RTA should follow to give effect to Mrs. Nair's request, and identify what would have been needed had the mode been 'jointly'.
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Documents and checks for the name deletion.
- Original or attested copy of the death certificate, verified against the folio name.
- Request signed by the surviving holder, with the folio number and the existing holding details.
- Her KYC is already validated; confirm the KRA record is current and that PAN and address match.
- Fresh bank mandate with a cancelled cheque in her name, or a bank statement or letter where the cheque is unavailable.
- A fresh nomination, correctly signed, replacing the defective 2015 entry.
- Updated contact details and, if she wishes, a change of the holding mode.
Processing. Delete the deceased holder's name so the folio reads in her sole name; do not open a new folio and do not require a transmission form. Deletion of a joint holder's name on death is not a transfer, so no stamp duty or capital-gains event arises. Update the registrar's records, issue a confirmation and a fresh account statement.
If the mode had been 'jointly'. Her signature alone would not have sufficed for the deletion, and the folio would have gone through transmission: death certificate, KYC of the claimant, and - where the value exceeds the simplified-documentation threshold for transmission without a valid nomination - an affidavit, indemnity and no-objection from other legal heirs. Where the value is within the simplified threshold, a shorter document set is accepted. Because a valid nominee would have displaced legal heirs entirely, the defective nomination also matters here.
3. What should the RTA do about the Rs 10,000 SIP auto-debit due from Mr. Nair's frozen sole account?
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The debit must not be allowed to keep presenting. The mandate is in the name of a deceased sole account holder whose account is frozen. Each presentation will bounce, and each bounce can attract bank charges, a scheme-level dishonour charge and repeated investor communication - harm to a customer who is already bereaved, and an avoidable operational and reputational cost.
Recommended action.
- Immediately place the SIP on 'suspended pending fresh mandate', after notifying Mrs. Nair in writing, rather than silently cancelling it. Suspension preserves the start date, instalment amount and any step-up history if she wants to continue.
- Ask for a fresh auto-debit mandate from an account in her own name (or a joint account she now operates), with a cancelled cheque and bank verification.
- On receipt and validation, reactivate the SIP from the next instalment date; do not back-fill the instalments missed during the gap, since that would require fresh funds and her consent.
- Where the mandate account was joint and the bank permits the survivor to operate it, the SIP may continue after the bank confirms the account is operative.
Control point. The RTA should have a standing rule that a registered death on any folio triggers an automatic review of every live mandate linked to that holder, before the next debit date.