You must have come across the term “Nominee” when opening a bank account. Whether it is a bank account, a policy paper, property paper, shares, or securities certificates, there is always a section to appoint a Nominee. In fact, in most money or property-related documents, there is always a section for Nominee.
A Nominee is a person who receives the benefit in case of the death of the account holder. A nominee can be the husband/wife/children or parents. The role of a Nominee is to act in the best interests of the claimant/recipient.
How Can You Appoint A Nominee For Demat And Trading Account?
To appoint a Nominee while opening a Demat and Trading account, the applicant must:
- Download the Nominee form
- Fill in all the required details
- Sign the document, and
- Courier the hardcopy to the stockbroker.
Though you can open a Demat account online, in most cases, you cannot add the Nominee details online. So, check with your broker before opening an online Demat account.
Why Should You Appoint A Nominee?
The money or the property that you have saved for the best interest of your family can no longer be utilised if you have not appointed a Nominee. In case of untimely death, there can be legal and financial hurdles for the family to recover the money. The delay in appointing a Nominee can also cause dispute among the surviving legal heirs for the transfer of shares and securities.
What If The Demat Account Holder Dies Without Appointing A Nominee?
New investors mostly forget to add a Nominee while opening a Demat account. Also, many investors are unaware of the consequences of not appointing the same. It is always best to appoint a Nominee after opening a Demat account.
But in case the Demat account holder dies without appointing a Nominee, then you will require two documents:
- Transmission Request Form
- Notarized Death Certificate of the Deceased person
You can download the form from the website of your Stockbroker/Depository. Once the documents are verified by the Stockbroker, the shares/securities will get transferred to the Claimant’s account.
If the value of shares/ securities is less than an amount of Rs 5 lakhs, then the legal heir of the deceased has to produce any of the following documents:
- Death certificate
- Notarised letter of indemnity
- An affidavit
- No objection certificate from other legal heirs
If the value of shares/ securities is more than an amount of Rs 5 lakhs, then the legal heir of the deceased has to produce any of the following documents:
- A succession letter
- A letter of administration
- A copy of the will of the (deceased) account holder
There can be disputes for appointing a Nominee after the death of the account holder. Moreover, there are also issues with documents that are required to receive the shares. The original death certificate has to be duly notarized by a gazetted officer before appointing the Nominee that can be time-consuming.
So, when opening a Demat and trading account, you must appoint a Nominee so that there are no contentions with the transfer of shares and securities in the future.