As per the latest report of SEBI more than 70% of demat accounts in India are without nomination, hence here we will explain in short How Add Nominations in Demat accounts. The offline and online method is as under:-
Who is nominee?
A Demat account nominee is someone you designate to inherit your assets and securities after your passing. It’s crucial to appoint a nominee, now mandatory in India, to ensure a smooth transfer of your holdings in case of your demise.
Previously, the deadline for nomination was March 2022, but it’s now extended to September 30, 2023. Failing to nominate might lead to a frozen account.
The nomination process is simple and can be done online or offline. Remember to provide accurate information and complete the process before the deadline.
Eligibility Criteria To Be A Nominee For A DEMAT Account Holder
Similar to bank accounts, Demat accounts require a nominee to inherit your investments in case of your passing. You can nominate up to 3 individuals, specifying their share percentage. Nominees must be relatives like parents, siblings, spouses, children, etc. Minors are allowed with guardian details. Non-individuals like trusts or corporations cannot be nominees.
A Comprehensive Guide To Add Nominee To Your DEMAT Account: Steps To Follow
Offline Method:
- Download and fill out the nomination form: Obtain the form from your Depository Participant (DP) branch or download it from their website. Fill in the details about yourself, the nominee(s), and the percentage of shares you want to allocate to each nominee. You can choose up to three nominees.
- Attach required documents: Include a self-attested copy of your ID proof and nominee(s) ID proof (PAN card preferred).
- Submit the form: Submit the completed form and documents to your DP branch in person.
- Verification: The DP will verify your documents and signatures.
- Processing: Once verified, your DP will process the nomination request and update your Demat account records.
- You can nominate up to three individuals and specify the percentage of shares each will receive.
- You can change or update your nominee information at any time.
- Nomination is a free service offered by most Depository Participants (DPs).
- By adding a nominee to your Demat account, you can ensure a smooth and hassle-free transfer of your investments to your loved ones, providing them with financial security and peace of mind during a difficult time.
- Eligibility: Your nominee must be a relative – parents, spouse, children, siblings, etc.
- Minor Nominee: Allowed with guardian details provided.
- Multiple Nominees: Up to 3 nominees can be appointed, specifying their share percentage.
- Non-Individuals: Not eligible (corporations, trusts, etc.).
- Update Regularly: Update nominee information with any changes in life situation or nominee details.
- Communication: Inform your nominee about your Demat account, investments, and expectations. Discuss financial goals and wishes for the assets.
- Transparency: Be transparent about any liabilities associated with the Demat account.
- Joint Accounts: The nomination process differs for joint accounts; consult your DP.
- Will vs. Nomination: While the nominee inherits Demat assets, a will dictates overall asset distribution.
- Professional Advice: Complex investment holdings or family dynamics might require consulting a financial advisor or lawyer.
- Clarity: Clearly specify share percentages to avoid disputes.
- Accessibility: Choose a nominee who can easily access and manage the Demat account.
- Trustworthiness: Select someone you trust completely with financial matters.
- Review Regularly: Reassess your nominee choice throughout your life and update when necessary.
Online Method:
Important Points for Nomination in Demat Account:
Advantages Of Adding A Nominee To Your DEMAT Account
Some key advantages of adding a nominee to your Demat account:
Smooth transfer of assets: In case of your unfortunate demise, your nominee can easily inherit your investments without any legal hassles. This ensures a smooth and timely transfer of your assets to your loved ones, avoiding lengthy probate processes and potential disputes.
Prevents account freezing: If you don’t have a nominee, your Demat account might get frozen after your death, making it difficult for your heirs to access your investments. This can cause significant delays and financial burdens during an already challenging time.
Saves time and money: The nomination process is simple and can be done online or offline. It saves your heirs time and money compared to going through a lengthy probate process to claim their inheritance.
Peace of mind: Knowing that your investments are taken care of in case of your absence provides peace of mind for you and your family. You can be assured that your hard-earned assets will be passed on to your loved ones according to your wishes.
Additional benefits to adding nomination in the Demat account:
Important Points to Consider When Adding a Nominee to Your Demat Account:
Choosing the Right Nominee:
Important Details:
Other Considerations: