Documents Required for Mutual Funds When A Minor Attains Majority

Investing in mutual funds for your child's future is a sound financial strategy. However, once your child turns 18 and attains majority, certain steps are necessary to ensure continued management of the account. This process is called regularisation. Without this step, further transactions on the account will be frozen.

Documents Required for Mutual Funds When A Minor Attains Majority- This guide simplifies the process of regularising your child's mutual fund account upon reaching adulthood.  We'll outline the necessary documents and steps to ensure a smooth transition, allowing you to maintain your investment plan without interruption.

Why Regularisation is Crucial

• Ownership Transfer: Upon reaching adulthood, ownership of the mutual fund units automatically transfers to your child. The guardian's role in managing the account ceases at this point.

• SEBI Regulations: As per SEBI regulations, further transactions on the account become frozen until the minor's status is updated to "major."

• Account Freeze:  To comply with regulations and ensure proper KYC (Know Your Customer) information, the account will be frozen for transactions initiated by the guardian. Dividend payouts or reinvestment, however, will continue uninterrupted.

Steps for Regularization

To ensure a smooth transition, follow these steps before submitting the "Change in Status" application:

Pre-Application Steps:

1. PAN Card:  Your child should apply for and obtain a PAN card (Permanent Account Number).

2. KYC Completion:  Ensure your child completes the KYC process if not already done.

3. Bank Account Update:  Update the existing bank account from "Minor" to "Major" or open a new account with your child's name pre-printed on the cheque book.

Regularization Application:

Once the above steps are complete, your child can proceed with the formal application process:

Change in Status from Minor to Major Form (MAM): Submit a duly filled "Change in Status from Minor to Major" form (MAM) along with the required documents.

The applicant's signature on the MAM form needs to be attested by any of the following:

• The parent/guardian whose signature is already registered with the mutual fund.

• A Notary Public or Judicial Magistrate First Class (JMFC).

• The applicant's bank, following a specific format.

Supporting Documents: Prepare the following documents:

• A copy of your child's PAN card.

• KYC documents (either acknowledgement or completed form).

• Cancelled cheque leaf with your child's name pre-printed or the latest bank statement/passbook.

• Signature attestation by the bank (if not attested by guardian, notary, or JMFC).

• Nomination form (optional but recommended).

• Fresh application for SIP, STP, or SWP (if applicable and the existing plan needs to be continued).

Beyond Documents: Tips for a Smooth Transition

• Review Account Statements: Before initiating the update process, familiarize yourself with your minor account details by reviewing recent statements. This helps ensure a smooth transition and identify any discrepancies.

• Research Investment Options: If you have mutual fund investments in your minor account, research different investment options available after transitioning. Consider your financial goals, risk tolerance, and investment horizon before making any changes.

• Consult a Financial Counselor:  While not essential, seeking guidance from a qualified financial counselor can be beneficial. They can help you understand your investment options, create a financial plan, and ensure your investments align with your goals.

Conclusion

By following these steps and submitting the necessary documents, you can successfully regularize your child's mutual fund account after they turn 18. This allows them to take control of their investments and make informed decisions about their financial future.