/financial-express-hindi/media/media_files/2Pe0Yzeku9xSxfUn1XUI.jpg?w=750&resize=750,0&ssl=1 "Mutual Fund: Do you want to gift mutual funds to your children? What is the right way and where to invest")
Can You Gift Mutual Funds: Do you want to gift mutual funds to your children or their children? It is quite natural to want to leave your wealth as a legacy for your future generations. But can this be done in the case of mutual funds? What is the right way to give mutual funds as a legacy or gift to your children or other family members? The question is also that if you want to invest in mutual funds in the name of your children or for them, then what kind of scheme will be better to invest in?
Can you gift mutual funds?
Actually, according to the rules, mutual fund units cannot be gifted to anyone just like that. Nor can you give mutual fund units to anyone through a gift deed. If you want to hand over your mutual fund units to someone, then one way is to make a will in his name. The second way is to transfer mutual fund units using off-market transactions under demat mode. But to use this method, it is necessary for the mutual fund units to be in demat mode. If the units of the fund are in physical mode, then they have to be dematerialized before transfer. Only after that they can be transferred in demat mode through off-market transactions.
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You can invest in the name of children
If you want to give mutual fund units to your children, then another way can be to invest in their name. Investments made in the name of minor children are controlled by their parents. After the children become adults, the units purchased in their name will come under their control. For this, their KYC will have to be completed after the children become adults. If the children are adults, then you can give them money and ask them to invest in mutual funds.
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Choosing the right mutual fund for children
Choosing the right mutual fund for children depends on the time frame of investment. If the child is very young and he is expected to need money after 10-15 years or even more, then you can invest in a good equity fund. Flexi-cap or multicap funds can be a good option for this. If even small amounts are invested regularly in such funds, then a good amount can be accumulated after 10-15 years. By doing this, children will also know the importance of regular savings and investment. If the child is a teenager and he is expected to need money in 5 years or less, then you can invest in a conservative equity fund or a conservative hybrid fund.
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What to do when your children become adults
If you invest in mutual funds in the name of your minor children, then after they become adults i.e. 18 years old, that account will be frozen for some time. To un-freeze the account, make a new investment in it or withdraw money from it, KYC of the child who has become an adult will have to be done. For this, his Aadhaar card and PAN will be required. Apart from this, he should also have a bank account which is linked to the mutual fund. You will have to give all these documents and details to the demat company or fund house. This work can also be done online with the help of MF Central portal.
