In the case of bank deposits and insurance, funds are directly transferred to the registered nominee's bank account if an adverse situation occurs, like the demise of the unitholder occurs. \r\rBut mutual funds have a different way of functioning. Net Asset Value (NAV) is the value of the securities of a mutual fund scheme denoted. The money that is invested in mutual funds is held mainly as units on the basis of NAV. Upon the investor's death, these units get transferred to the nominated person of the scheme. \r\rOnce this transfer has happened, it is solely the preference of the nominee that those units that he/she has received are to be continued as the investor or be redeemed. THERE ARE NO OBLIGATIONS TO SELL OR TO CARRY ON WITH THE INVESTMENT. \r\rIf in case the nominee wants to continue investing in the mutual funds that they've gained access to, then there are different rules available to be applied during the lag period between the demise of the scheme holder. This will make sure that the returns are high during this phase. \r\rThe transmission of the units of mutual funds attracts no tax. The nominee, however, is not permitted to redeem the transferred amount until the first fifteen days of the transfer. After these 15 days, the gain on the mutual fund units will become taxable.