How securities are transmitted on Death of Demat account holder?

A Demat account holds securities in dematerialized form. As with all assets, it is important to address the issue of how securities in a demat account can be transferred upon death. This refers to the transfer share from one demat into another. Three scenarios are common in the event of the death or disability of a demat account holder.

1. Prior to the demise of the account holder, a nominee was appointed.
2. The demat account was jointly managed.
3. The demat account was owned by one person and had no nominee.

Except for the second, securities must be transferred to another account. It is therefore important to know how to transfer share from one demat account to another account in each case.

1. Nominee Exists

There is often an option to name a nominee when opening a demat bank account. In the event of death, the assets in the demat account will be transferred to the nominee. This transmission does not happen automatically. To transfer shares from one demat account to another, one must follow the proper process. The nominee must send the following documents (DP) to the office of the participant depository.

1. Transmission Request form -This form contains details about the client and nominee as well as the assets in the demat account to be transferred. You can download the form from the website for your depository participant (DP).
2. Death Certificate A copy of the death certificate for the deceased account holder, attested by a Gazetted officer or notarized.
3. Client Master report - A client master report (or CMR) is an important KYC document. It contains all details about the client and their demat accounts, such as securities held, bank accounts linked to the demat account, and other pertinent information. The client master report for the nominee is required in this instance. You can download the CMR from the website for the trading platform of your DDP.

2. Joint Demat Account

If the demat account was joint, the second account holder will be able to take ownership of any assets in the account. The following documents are required in this instance:

1. Transmission Request form - This is the exact same form that was required in the preceding case. In the case joint accounts, most DPs will have a separate annexure. This is different from the one required for a nominee. Your DP will provide the appropriate annexure.
2. Death Certificate - A copy duly signed by a Gazetted Officer or notary.
3. Client Master report- The CMR for joint account holders must be provided.

3. One Owner, No Nominee

How do I transfer shares from one online demat account to another in the event of death? The deceased's account was not managed by any nominees and it was operated alone. These are more complicated cases than other. These are the Documents which are a must to transfer shares from one demat to another

1. Transmission Request form - Just like in the two previous cases, the transmission request forms must be filled out.
2. Death Certificate A copy of the death certificate must be submitted with the Transmission Request Form.
3. Additional to the two above, you will need any of the following documents:

• Letter Of Indemnity –A letter stating that the person named in the letter is the legal heir to the deceased is called a letter of indemnity. The letter must be signed on non-judicial paper, and notarized by an notary.
• Affidavit - This affidavit can be printed on non-judicial stamp papers and states that the applicant is the legal inheritor of the deceased. It also identifies the rightful claimant for the assets in the demat account. This affidavit must be properly notarized.
• No-Objection Certificate This certificate is required in the event that there are multiple legal heirs, and one of them is applicant. This NOC indicates that all legal heirs are in agreement with the transfer of securities from the demat account to the applicant.
• Family Settlement deed - A family settlement deed can be used when assets of the deceased must be divided among the surviving heirs. If one has to transfer shares from one type of demat to another, the family Settlement Deed will detail how the shares should be divided among the various legal heirs.

Conclusion

In the event of account holder's death, it is crucial to understand how to transfer shares between demat accounts. The process is easier in joint accounts and when the account holder has designated a nominee. Nominating a nominee identifies who will inherit the assets in the demat account in case of death. To avoid any problems later, it is a good idea to appoint someone to serve as a nominee for a demat account.