A demat account shares a lot of similarities with a bank account. For one, both of them are electronic accounts. And secondly, they’re used to safely and securely store assets electronically – money in the case of a bank account and securities, like shares and bonds, in the case of a demat account.
Considering the fact that you use your demat account to store your investments, the concept of assigning a nominee to your account also applies here, just like how you would do to a bank account.
But how do you assign a nominee to your demat account and why should you do it? The answers to these questions are outlined in the sections that follow. Continue reading to find out all about assigning a nominee to your demat account. But before we get to the answers, let’s first discuss the fundamental concept of what the term ‘nominee’ means.
In simple terms, a nominee is an individual who is assigned by the owner of an account. This assigned individual will receive any and all benefits arising from the account, including any balances remaining with the account, in the event of the demise of the account owner.
Since all of the benefits and balances of an account would go to the nominee upon the account owner’s demise, individuals generally choose to assign their own family members such as spouse, children, or parents as a nominee to their account.
Assigning a nominee is one of the most important tasks that you should do as a demat account holder. One of the main reasons for this has to do with the fact that having a nominee makes it extremely easy for the demat account holder’s family and beneficiaries to withdraw the shares held in the account.
Without a nominee assigned to a demat account, the bereaved family will be forced to meet several cumbersome legal requirements like obtaining a succession certificate. Only then can they actually go ahead and claim ownership of the securities in the account. This can unnecessarily cause delays and hassles to the family, since the process of obtaining a succession certificate can be both expensive and time-consuming.
However, with a nominee assigned to a demat account, all of these hassles can be eliminated. And to claim ownership of the securities in the deceased individual’s demat account, the nominee only has to submit a transmission form that has been duly filled, along with a certified copy of the demat account holder’s death certificate. The entire process of transferring the assets can then be completed within just a few days instead of taking several months.
Now that you know how important it is to add a nominee to your demat account, let’s take a look at when you can add one.
The best time to add a nominee to your demat account is at the time of opening of the said account. This will eliminate the chances of you forgetting to add a nominee later on, and it will also ensure that your account and the assets therein are adequately protected.When you are filling up your demat account opening form, whether offline or online, all that you have to do is ensure that you fill in the details of the individual or individuals whom you would like to assign as nominees to your account. Also, you might have to submit certified copies of their KYC documents like their identity proof and address proof along with the account opening form.
However, if you have forgotten to assign a nominee at the time of opening of your account, you don’t need to worry. One of the advantages of a demat account is that you can add a nominee at any point in time. You have to simply get in touch with the concerned authorities and submit the necessary documents such as the filled nomination form, along with the KYC documents of the nominee. And your nominee will be assigned as per your instructions.
Adding a nominee to your demat account is an extremely easy and hassle-free process. Here’s a quick look at the two different ways through which you can add a nominee.
Now, in most cases, your stock broker is also your Depository Participant. This is especially true when you open both a demat and trading account from a single stock broker. TradeSmart, for instance, is a DP and a stock broker with whom you can open a demat and trading account.So, if your stock broker also fulfills both these roles, all that you have to do to add a nominee is download the nomination form from your stock broker’s website, fill it up with the nominee’s details, get their signature, affix your own signature, and submit the form along with the necessary documents to your stock broker.
Alternatively, if your stock broker and your Depository Participant are two different entities, then you would have to submit the duly filled nomination form and the necessary documents directly to your Depository Participant.Some stock brokers also allow you to assign a nominee online as well. So, it might be a good idea to first check if your stock broker permits you to do it online, before going ahead with the offline method described above.
Now, there are quite a few things that you should consider when adding a nominee to your demat account. Let’s take a quick look at a few of these important considerations.
As you can see, assigning a nominee is extremely important since it can drastically reduce the complications in the transmission of shares and securities in the event of the demat account holder’s demise. If you already have a demat account and haven’t assigned a nominee yet, it is advisable to initiate the process forthwith without any further delay.
On the other hand, if you don’t already have a demat and trading account, all that you would need to do is visit TradeSmart Online. You can open demat account in an easy and paperless process within just a few minutes.
Assigning a nominee to a demat account simplifies the process of transmission of shares in the event of the account holder’s death.
Yes. You can have up to 3 nominees for your demat account.
Of course. Minors can be added as a nominee of a demat account as long as you also mention details of their guardian.
Some stockbrokers allow you to add a nominee online, while others require you to fill up a nomination form, attach the necessary documents and send them across to their office. Therefore, it is advisable to check with your stockbroker first to see if they allow you to add a nominee online.
While you can add a nominee at any point in time, the ideal time to do it would be at the time of opening an account itself.
Please note that by submitting the above mentioned details, you are authorizing TradeSmart to call and email you and also to send promotional communication even though the contact number may be registered under DND.
Please note that by submitting the above mentioned details, you are authorizing TradeSmart to call and email you and also to send promotional communication even though the contact number may be registered under DND.
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Please note that by submitting the above mentioned details, you are authorizing TradeSmart to call and email you and also to send promotional communication even though the contact number may be registered under DND.