Can You Transfer Mutual Funds to Another Person?

Because a folio is tied to the investor identity, not just to a name on a form.

The units sit against your PAN, your KYC and your bank account. Handing them to somebody else would mean changing who the investor is, and the rules do not allow a folio to change hands that way while you are alive.

So requests like changing the name on the folio to your wife, or adding your son as the owner, cannot be processed. Our page on the mutual fund folio explains what a folio is tied to.

This is what most families end up doing, and it is straightforward.

You redeem the units, the money comes to your registered bank account, and you give that money to the other person. They then invest it in their own name, in their own folio.

Two things to know. The redemption is a sale, so exit load may apply and there are tax effects, which our pages on exit load and mutual fund taxation cover structurally. And gifting between family members has its own tax treatment, which is a question for a tax adviser rather than for us.

Here the answer changes, which is why people get conflicting information.

Units held in demat form can be gifted like shares, through an off-market transfer instruction with your broker. The units move to the other person demat account without being sold.

That route needs both people to have demat accounts, and the tax treatment of the gift still applies. Our page on whether you need a demat account explains the two ways units can be held.

A common question, and the answer is usually no for an existing folio.

Most fund houses do not allow a new joint holder to be added to a folio that was opened in one name. What you can do is start a new folio held jointly, and invest fresh money there.

Joint holding also decides who can sign a redemption, which is worth thinking about at the start. Either or survivor is the common choice, since one holder can act alone.

This is the one situation where units really do move to another person, and it works well when the paperwork exists.

Where a nominee is recorded, the nominee submits a transmission request with the death certificate and their identity documents, and the units move into their name. Where no nominee is recorded, the family usually needs legal documents such as a succession certificate, which takes months.

Our page on nomination covers recording one, and our post on transferring mutual funds after a death lists the documents. If you are reading this page because you want your family to get your investments easily, the nominee is the answer, not a transfer.

If the real aim is to build money for another person, do it in their name from the start.

For a child under eighteen, open a folio in the child name with a parent as guardian. Our page on investing for a child education covers it.

For a spouse, have them complete KYC and invest in their own folio, which our page on investing as a woman in your own name discusses.

For a parent, same thing, with their KYC and their bank account. Our post on investing for parents who are not comfortable with apps covers the practical side.

This is the one change of status that happens inside a folio, and it is often confused with a transfer.

When a child whose folio was opened with a parent as guardian turns eighteen, the folio has to be converted to the child own name. The child completes KYC, the bank account is changed to one in the child name, and the guardian steps out. Until that is done, transactions are usually frozen.

So if you have folios for a child approaching eighteen, plan the paperwork a few months ahead. It is a small job that becomes a nuisance only when it is left until the money is needed.

We will not advise on this, and here is why.

Income from money gifted to a spouse or a minor child can be clubbed back to the giver under tax rules, so the saving people expect often does not happen. The details depend on who receives it and what they do with it.

So the structure has to be checked by a tax adviser before you move anything. Our page on mutual fund taxation explains what we can and cannot help with.

• Statement form units: no transfer between living people. Redeem and gift the money instead.
• Demat units: can be gifted through an off-market transfer.
• Existing folio: a new joint holder usually cannot be added. Start a fresh joint folio.
• On death: transmission to the nominee, which is why the nominee matters.
• For somebody else: invest in their name from the start.

We are distributors rather than investment advisers and we do not advise on tax. If you want help setting up folios in the right names, get in touch.