Trading in the stock market requires the ownership of a Demat account. It protects your securities in electronic form and provides a simple way to manage your money. However, you may question what happens to your securities if you die. While this is not the most pleasant subject, it is critical to understand how the transfer of securities works if a Demat account holder dies.
In the following article, we’ll walk you through the process of transferring shares after an account holder’s death, making it as clear, simple, and understandable as possible.
What is Transmission of Securities?
Transmission of securities is the process of passing on of securities from a Demat account after the death of the account holder. Luckily, there is suitable procedure in place to guarantee the timely transfer of the said assets to the corresponding nominee, joint account holder or the legal beneficiaries.
Average time for account verification is approximately 15 working days and depends on whether the account has nominee or joint holding. It is now time to take a look at all the possibilities.
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1. When There is a Nominee
While getting the Demat account opened, there is a question about the nominee, the person to whom the securities in your Demat account will go in case something happens to you. The transfer, however, will not be automatic. It is worth noting that the nominee still has to present some key documents to the depository participant (DP). Here’s what’s required:
- Transmission Request Form (TRF):
The nominee has to complete a TRF which in most cases can be accessed in the DP’s website. This form is going to seek information about the account holder, the nominee, and the asset which are to be transferred.
- Death Certificate:
All that is required is a copy of the death certificate of the deleted account holder. It should be certified or also be proved by a Gazetted Officer.
- Client Master Report (CMR):
The following report has information about Demat account, securities, and Bank details linked with it. In most cases, the nominee’s CMR can be obtained from the trading platform of the DP.
That is when the DP will start working on the transfer of securities to the nominee after presentation of these documents.
2. But When the Account is Jointly Held
It is even more simple when the Demat account is a joint account with more than one person. If one of the account holders dies then the securities automatically go to the surviving joint holder(s). However, there are still some papers left to be filled in. The required documents include:
- Transmission Request Form (TRF):
Just like with a nominee, a TRF needs to be filled out. However, joint accounts have their own annexure for this form, so be sure to get the correct version from your DP.
- Death Certificate:
True copy of the death certificate certified by a notary is required or the copy must be Certified by a Gazetted Officer.
- Client Master Report (CMR):
The CMR of both joint account holders (or the surviving holder) is required.
This process is relatively easy, mainly because the surviving account holder already has access to such an account.
3. When There is No Nominee
What happens if there’s no nominee? This situation makes the process a bit more complex, but it’s still manageable. The legal heirs will need to submit more documents to ensure the securities are transferred correctly. Here’s what’s needed:
- Transmission Request Form (TRF):
This form must be completed each time.
- Death Certificate:
Copy of the death certificate of the deceased account holder must be attested or notarized.
- Letter of Indemnity:
This is a legal document stating that the person applying for the transfer is the rightful heir of the deceased. It needs to be notarized and stamped on non-judicial paper.
- Affidavit:
A sworn affidavit on non-judicial stamp paper is also needed which states the fact that the applicant is the legal heir of the owner.
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- NOC (No-Objection Certificate):
Where there are co-heirs and one of them is seeking the transfer, the others must sign a clearance that they do not oppose to the transfer.
- Family Settlement Deed:
The following document explains on how the shares shall be split among the legal beneficiaries.
This requires more paper work though incorporating a nominee at the initial account opening stage of Demat account saves your loved ones this essay.
Conclusion
As stated above, Demat account is always convenient if the person already owns securities but it is always good to plan for the worst. Naming a nominee or holding a joint account are great ways to simplify the process for your loved ones. And if there’s no nominee, while the process is more involved, it’s designed to ensure the shares are transferred correctly and fairly.
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