For holding shares and facilitating trading, a Demat account is required. An investor cannot purchase, sell, or hold shares without a Demat or trading account. You can add a nominee to your Demat account just like your bank’s savings account.
You can permit someone who will legally inherit your investments in an unexpected circumstance.
A nominee is a person who has been given permission. You should note that while the nomination is not required, it is suggested.
When enrolling with the investment broker or sub-broker, investors open Demat accounts. These accounts are preferred for stock trading, acquisition, and disposal since they allow for electronic settlements.
The Usual Process To Add A Nominee
Although it’s not required, adding a nominee to the Demat account is a good idea. Taking this little action can avoid a lot of hassle if the main beneficiary passes away.
The account’s beneficiary can choose whether the securities in your account must be allocated on a pro-rata basis if there are numerous candidates.
You can also specifically assign securities to each nominee and a fixed percentage to each.
A physical signature is required to add someone as a nominee for the Demat account.
Therefore, you must either complete the nomination form or send a courier to the head office’s address.
Either option will allow you to add a nominee for a Demat account. It’s easy to add nominees by simply including their names on the account opening form you send to your favorite broker.
You might attach a copy of the nominee’s ID along with the nomination form. Any identification will include Aadhaar, a voter ID, a driver’s license, etc., to check your account’s nominee.
By giving your broker an Annexure 1A form, nominees can also be added, changed, and removed at a later time.
When your nominee for your Demat account is added, a comparable nomination will also be valid for holding your currency or mutual fund.
Points to consider adding a nominee
- The process for transmitting shares when only one Demat account holder dies and leaves a nominee is straightforward. The candidate must submit a properly completed transmission form and an official copy of the deceased person’s death certificate that a Gazetted Officer has attested.
- A nominee can only be provided by an individual who is the only or joint account holder of a beneficiary account. A society, body corporate, partnership, HUF Karta, or anyone holding a power of attorney is an example of non-persons who are not authorized to nominate.
- The nominee is not permitted to be a trust, society, body corporate, partnership company, Karta of HUF, or someone possessing a power of attorney. All account holders must sign the nomination form if a jointly owned account wishes to revoke its nomination.
- Each account holder must sign the nomination form for a jointly owned beneficiary account.
- The family members might not be given the shares or money if a nominee has not been preordained. According to reports from the RBI, numerous unclaimed deposits are said to be present in banks all around the nation. These accounts belong to people who either haven’t claimed their money, have passed away, or haven’t submitted nomination information.
- A minor cannot designate a nominee for their account. However, an adult beneficiary may name a minor as a candidate.
Switching a nominee for the Demat account
When selecting a nominee for your Demat account, keep in mind that there are a few challenges to overcome when changing the nominee, including:
- Even the hard copies of the account update form and the nomination form must be submitted.
- You must pay fees of Rs. 25 plus 18% GST once you have selected a candidate and even nominated a person while switching that specific nominee.
Why appoint a nominee
Designating a nominee might help you and your family avoid a lot of hassle in the event that a major beneficiary passes away unexpectedly.
Typically, while opening a Demat account, a nominee is chosen. If you haven’t already, you can later add a nominee by logging into the web portal for Angel One.
The grieving family will be obliged to comply with several onerous legal obligations, such as getting a succession certificate if a nominee is not designated to a Demat account.
They cannot claim ownership of the securities in the account until that time.
Acquiring a succession certificate can be costly and time-consuming; this could unnecessarily cause the family delays and headaches.
Including a nominee facilitates the transfer of securities stored in a Demat account, such as shares, bonds, mutual fund units, G-Secs, etc., simply in the event of an unforeseen incident.
Saves your family members from laborious processes (and court battles) involving collecting and submitting numerous documents to the appropriate authorities, such as NOCs (No Objection Certificates) and affidavits.
All of these inconveniences can be avoided by assigning a candidate to a Demat account. The nominee needs to submit a transmission form that has been properly filled out and a certified copy of the Demat account holder’s death certificate to assert ownership of the securities in the account of the deceased.
The full asset transfer procedure can be finished in several days instead of months.
When to add nominee in Demat account
At the time of opening of account
Along with the account opening form, you might also need to send certified copies of their KYC documents, such as their proof of identification and address.
The ideal time to add a nominee to your Demat account is when the account is first opened.
Enter the information for the person or people you want to name as nominees on your account while filling out the demat account opening form, whether offline or online.
This will eliminate the possibility that you’ll later forget to add a nominee and guarantee that your account and its assets are sufficiently safeguarded.
Anytime after opening a Demat account
Get in touch with the authorities and deliver the required paperwork, such as the completed nomination form and the nominee’s KYC records.
Your nominee will be placed where you choose. You don’t need to worry if you neglected to name a nominee when you opened your account.
The ability to add a nominee at any moment is one benefit of having a Demat account.
Amit Gupta is the creator of FreeDematAccount.in, a website that specializes in Demat accounts and provides assistance to all its users in navigating through complicated decisions. After completing his high school certification, Amit spent half a decade learning about Demat accounts from brokerages. Before forming FreeDematAccount.in, Amit worked for a Demat account brokerage.