In the world of digital finance, Trading Account, and demat accounts play a significant role in storing securities electronically. Like we store our expensive materials securely in our homes, it is equally important to secure your Demat Account. One of the best ways to ensure your investments is by adding a Nominee in Demat Account. If your family is dependent on you and you have parents, spouses, and children, a Nominee ensures they have the financial support even in your absence.
Be it any Demat Account provider, if you choose to Open a Demat account, you must submit nominee details who will have the right to claim your securities in the event of unexpected demise. The nominee can be a family member, close relative, or any trusted individual nominated by you.
In this article, we will understand the significance of a Nominee in a Demat Account.
What is a Demat Account Nominee?
A nominee in a Demat account is a person designated by the account holder to inherit the securities held in the Demat account in the event of the account holder’s death. The nominee acts as a beneficiary and can claim ownership of the securities without undergoing the complex legal procedures often associated with inheritance. Here’s a detailed explanation of the concept:
Purpose of a Demat Account Nominee
Simplifies Transfer of Assets: Nomination in Demat Account ensures a smooth and hassle-free transfer of assets to the beneficiary. It avoids lengthy legal processes such as obtaining a succession certificate or probate of a will.
Prevents Disputes: A Nominee for Demat Account helps prevent potential disputes among legal heirs or family members over the ownership of the securities.
How to Appoint a Demat Account Nominee?
During Account Opening: Most Demat account providers offer the option to nominate during the account opening process.
Post Account Opening: If not done initially, the account holder can later submit a nomination form (Form SH-13) to the Depository Participant (DP).
Rights and Limitations of a Nominee
Right to Securities: Upon the death of the account holder, the nominee has the right to claim the securities held in the Demat account.
No Ownership Until Demise: The nominee does not have any rights over the securities while the account holder is alive.
Legal Heir vs. Nominee: While a nominee has the right to claim the securities, the ultimate legal ownership might still be contested by legal heirs, depending on the jurisdiction and specific circumstances.
Process After Demise of Account Holder
Notification: The death of the account holder needs to be notified to the Depository Participant.
Submission of Documents: The Demat Account Nominee must submit required documents such as the death certificate of the account holder, proof of identity, and a duly filled transmission request form.
Transfer of Securities: After verification, the DP will transfer the securities to the nominee’s Demat account.
Benefits of Having a Nominee
Ease of Access: The nominee can quickly and easily access and manage the inherited securities.
Reduced Legal Hassles: Minimizes the need for legal intervention and documentation to claim the securities.
Financial Security: Provides financial security to the nominee by ensuring they can directly inherit the securities.
How to Check Nominee in Demat Account?
To check the nominee details in your Demat account, you can follow these steps:
Online Method
1. Login to Your Demat Account:
Visit the official website or mobile app of your Depository Participant (DP) (e.g., NSDL, CDSL, or any bank/broker providing DP services).
Log in using your credentials (User ID and Password).
2. Navigate to Nominee Details:
After logging in, navigate to the section related to account details or profile settings. This might be labeled differently depending on your DP, such as “Profile,” “Account Information,” “Nominee Details,” or “Account Services.”
3. View Nominee Information:
Look for an option to view or manage nominee details. Click on it to see the current nominee information associated with your Demat account.
The details displayed should include the nominee’s name, relationship with the account holder, address, and other relevant information.
4. Download or Print:
If needed, you can download or print the nominee information for your records.
Offline Method
1. Visit the DP’s Office:
Go to the branch or office of your Depository Participant where you hold your Demat account.
2. Request Nominee Information:
Request the nominee details by filling out a form or simply asking the customer service representative for assistance.
You may need to provide your Demat account number and some form of identification.
3. Verify Details:
The representative will provide you with the nominee details either in print or by showing you the information on their system.
4. Update If Needed:
If you find any discrepancies or if you need to update the nominee details, you can do so by filling out the relevant forms (Form SH-14 for changes).
Through Customer Support
1. Contact Customer Support:
If you opt out of both online and offline mode, this method will help.
Call or email the customer support team of your DP. Ensure you have your Demat account number and other identification details ready.
2. Request Information:
Request them to provide you with the nominee details. They may ask you some security questions to verify your identity before disclosing the information.
3. Receive Details:
The customer support team will provide you with the nominee information either verbally, through email, or by directing you to the relevant section on their website/app.
Important Considerations
Ensure you are accessing your account through the official website or app of your DP to avoid phishing or fraud.
Regularly check your nominee details to ensure they are accurate and up-to-date. This is especially important if there have been changes in your circumstances (e.g., marriage, birth of a child, etc.).
Keep a record of any changes made to your nominee details. This will help in avoiding any disputes or confusion in the future.
Adding a nominee to a Demat account involves completing and submitting specific forms to the Depository Participant (DP). Here’s a step-by-step guide to the process of Nomination in Demat Account:
1. Obtain the Nomination Form:
Collect the nomination form, typically Form SH-13, from your Depository Participant (DP) or download it from the DP’s website.
2. Fill The Form:
Are you concerned about how to fill out the nomination form? Here’s how you can do it.
Enter your Demat account number and other relevant details.
Provide complete information about the nominee, including:
Full Name
Address
Relationship with the account holder
Date of Birth (if the nominee is a minor)
If the nominee is a minor, provide the guardian’s details, including their full name and address.
3. Signature of the Account Holder:
Sign the nomination form. If there are joint account holders, all of them must sign the form.
4. Submission of the Form:
Submit the duly filled and signed nomination form to your DP’s office.
5. Verification Process:
The DP will verify the details provided in the nomination form.
6. Confirmation:
Upon successful verification, the DP will update the nominee details in their records and in the demat account.
7. Acknowledgment Receipt:
The DP with client ID will provide an acknowledgment receipt confirming that the nomination has been successfully registered.
Key Points to CheckBefore Adding a Nominee
Multiple Nominees:
Some DPs allow for the appointment of multiple nominees (up to three nominees), specifying the percentage of securities each nominee is entitled to. You may need to fill out separate forms or provide additional details for multiple nominees.
Updating Nominee Details:
If you wish to change or update the nominee details, you need to fill out Form SH-14 for cancellation or change of nominee and follow a similar submission and verification process.
Legal Requirements:
Ensure that the nomination complies with all regulatory requirements set by the depository and financial authorities.
Nominee’s Rights:
The nominee’s rights will come into effect only after the demise of the account holder. Until then, the nominee has no control over the account.
Importance of Nomination
Ease of Transfer: Facilitates the seamless transfer of assets to the nominee.
Prevents Legal Complications: Minimizes legal hassles and ensures that the nominee can claim the securities without delays.
Financial Security: Provides financial security and clarity on inheritance.
Eligibility Criteria for Nominees
It is necessary to consider the following factors when adding a Nominee/Nominees:
Nominees can include parents, siblings, spouses, children, or any other person.
Minors can also be nominated, but their guardian’s details need to be provided.
Non-individuals like the Karta of a HUF, corporations, or societies cannot be nominees. Nominees must be actual people who are part of your family or friend circle.
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How to Add, Update, or Change the Nominee in Your Demat Account?
If you want to update or change the nominee for your Demat account, follow these steps:
Log in to Your Demat Account: Access your account and go to the account settings or profile section.
Find the Nominee Update Option: Look for the option to update or change nominee details.
Submit the Necessary Information: Enter the new nominee’s details or the required changes and submit your request.
Verification and Approval: The depository participant will verify the information, and once approved, the updated nominee details will be reflected in your Demat account.
Common Mistakes to Avoid
When nominating a person in your Demat account, avoid the following common mistakes:
Providing incorrect nominee details.
Failing to update nominee information regularly.
Not understanding the implications of nomination revocation.
Conclusion
Adding a nominee in Demat account is a critical aspect of financial planning to ensure the seamless transfer of securities to your chosen individual. It is imperative to keep your nominee details updated in your Demat account to avoid any complications during the transfer of securities. Regularly reviewing and updating nominee details ensures that your investments are protected and passed on as per your wishes.
So, did you understand how to add nominee in Demat Account online?
What happens if I do not nominate anyone in my Demat account?
If you do not nominate anyone in your Demat account, the process of transferring securities in the event of your demise can become complicated and time-consuming for your legal heirs.
Can I change the nominee details in my Demat account?
Yes, you can change the nominee details in your Demat account by filling out a nomination form and submitting it to your Depository Participant (DP).
Is it mandatory to stay informed with CDSL Nominee Update?
It is not mandatory to keep checking CDSL nominee updates online every morning, but it is highly recommended to keep your nominee information updated to avoid any discrepancies during the transfer of securities.
How often should I review my nominee details in my Demat account?
It is recommended to review your nominee details in your Demat account periodically, especially in case of any life events such as marriage, divorce, or the birth of a child.
What documents are required to add a nominee to my Demat account?
To add a nominee in your Demat account, you will need to fill out a nomination form provided by your DP. Along with the form, you may be required to submit documents such as identity proof, address proof, and passport-size photographs of the nominee.
