Can I gift Mutual Funds to my younger sister, who is a minor?


Technically, Mutual Funds are non transferable and therefore, gifting of MF units is not possible. If one wishes to do so, one should sell his/her MF units, transfer funds as gift to sister and she may purchase same MF units in her name. However, if sister is a minor ,then only gurdian can purchase the MF units on behalf of minor.
 

Investments in minor's name from a third party can be done in child gift mutual fund schemes.
 
Either of the parents have to be the guardian and payout account has to be of the kid (As per regulatory guidelines, payout can't be into third party account from January 2020) and donor can be anyone in this segment of schemes.
Yes, you can gift equivalent amount of money to your sister who is a minor, but the clubbing of income will remain in your name as far as income tax is concerned. You can then use the money from her bank account which you have gifted, to buy MF units in her name through your parents as guardian till she becomes a major. Once she becomes 18, she can continue to hold the investment in her name for future.

Unlike shares, mutual fund units cannot be simply transferred from one person to another, except on demise of the unit-holder.

The ideal way to do it is to open a minor bank account in your sister's name. You can be the guardian for her.

Also, investments have to be done in your sister's name with you as a guardian.

When she turns into an adult, she will have to apply for a status change (from minor to major) for those investments and they will eventually be in her name.

 

All the data/information shared above are opinions/ views that solely belong to the Mutual Fund Distributors. UTI Mutual Fund (acting through UTI Trustee Company Pvt Limited) / UTI Asset Management Company) owes no responsibility/ liability whatsoever in this regards. The information contained should not be construed as forecast or promise, and the only objective of this initiative is to educate the consumers to take a more informed investment decision. Any investment decision taken based on the information provided in the content above shall be at sole risks, cost and consequences of the user.



 


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