After the death of a person, the surviving family members need to figure out how to proceed with the transfer of the deceased person’s assets. That is, how to transfer the ownership of the property to the family members.
The process of transmission may differ across asset classes. It can also be a function of the form in which assets are held in the case of securities – such as in physical or demat mode. In this article, we look at how one can proceed with the transfer of securities (shares, mutual funds, bonds etc.) held in the demat account after the death of the account holder. In such a case, the nominee or legal heir(s) will have to approach the Depository Participant (i.e. demat account provider such as a broker or bank) if no nominee has been registered for the demat account. Transmission request form and related documents.
The nominee is not the owner, and is only the custodian/trustee of the assets until these are passed on to the final legal heirs based on the will, if any, of the deceased person, or succession laws. However, the nominee can also be the legal heir. For example, you can choose one of your two sons as the nominee, but they will both be your legal heirs, unless otherwise specified in your will.
There can be many scenarios, and the documents required for transmission will depend on the specifics of each case.
Scenario 1
The simplest case is where the demat account is jointly held by three people – A, B and C, and A dies. Then, the remaining demat account holders, B and C will approach their Depository Participant (DP) with a transmission request form, A’s death certificate (either in original or a copy thereof attested by a notary or a First Class Magistrate), their KYC Bank-attested documents with signature verification, and canceled checks or recent (not older than 3 months) bank details with their names on them. For KYC, they can submit their PAN card for identity proof and Aadhar card for address proof. Other options include Voter ID card and Ration card.
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B and C will also have to submit a Client Master Report (CMR) duly stamped and attested to a Joint Demat Account in their names. This can be an existing or newly opened demat account in the same order of ownership as it was in the original demat account. CMR is a digitally or physically signed certificate containing your demat account details issued by the broker. After the transfer of securities to the new demat account, the old demat account ceases to exist, and hence gets closed.
Scenario 2
The second is the relatively simple case where a demat account has a single holder who is deceased, or the account is held jointly and all the account holders have passed away, and two nominees, D and E, are designated for this account. have been done. You can have one nominee and go up to three. In this case, D and E will have to submit the same documents submitted by the surviving account holders under Scenario 1 and similar process is as follows. They have to submit a transmission request form along with the death certificates of the deceased account holders, their KYC documents as well as their bank-verified signature verification, and checks canceled or recently (more than 3 months old) with their names No) Bank details. They will also have to provide a joint demat account in their name with duly stamped and attested CMR (in the same order as in the order of enrollment).
Hence, in a situation where a nominee is specified, the process of transmission is fairly straightforward. But, in the absence of a nominee, the process becomes more complicated, and additional documents have to be submitted depending on the value of the securities in the demat account on the date of claim. This can result in two scenarios.
Scenario 3
There is no nominee in the demat account, and the value of the securities in the demat account is up to Rs 15 lakh on the date of claim. In the absence of the nominee, the legal heirs will have to go ahead with the process. They can either file a claim for broadcast together or alternatively, appoint one or more of them as claimants to represent the matter to the DP on their behalf. The following documents have to be submitted – death certificate and KYC documents of the deceased demat account holder along with attested signature verification by the bank of the claimant(s) and legal heirs. Claimants will also have to provide canceled checks in their names or their recent bank statements.
The legal heirs will have to provide an NOC (No Objection Certificate) to prove that they agree on the claimant chosen to represent them on their behalf. In addition to this, they will also have to submit personal affidavits and indemnity bonds.
Scenario 4
There is no nominee in the demat account, and the value of the securities in the demat account as on the date of claim does not exceed Rs. is more than 15 lakhs. Under this scenario, the documents required under Scenario 3 will have to be submitted to the DP. In addition, the claimant(s) must provide a probate of the will, or a succession certificate or letter of administration (LOA) to help establish their identity as the claimant(s).
time and cost
“While a will is the most reliable and legally acceptable document to aid in asset distribution after the demise of the property owner, in the absence of a will, the legal heirs have to go through a well established and documented process that takes time. “Consumption and cost reduction,” says Rajat Dutta, founder and initiator of Inheritance Needs Services. May take days. This is subject to all documents being in order. “When there is no nomination in the demat account, probate of the Will/Succession Certificate/LOA has to be obtained and it may take from six months to one year. It may take time. With probate, the court supersedes a will. The last and final will of the deceased person and thus certifies that the property is to be distributed accordingly.
Dutta suggests that in the absence of a will, if there is a cordial relationship between the members of the family (beneficiaries), it is advisable to obtain an LOA. The LOA lists all the assets of the deceased person, and specifies the administrator (appointed by the beneficiaries) who will administer the process of distribution of all assets with the consent of the beneficiaries. In cases where there is a dispute within the family, a succession certificate has to be obtained from the court. The succession certificate only lists all the properties and the names of all the heirs of the deceased person. Distribution is done in accordance with the relevant succession laws.
According to Marolia, there is no charge for the transmission process. But there is a cost involved in obtaining probate of a will/succession certificate/LOA, which usually varies from city to city and lawyer to lawyer. For example, in Mumbai, the court fee is Rs. 75,000, and the lawyer’s fee can range from Rs. 1.25-1.5 lakhs.
Considering that having a nominee makes the process of transmission quite simple and easy, registering a nominee is an absolute must. Note that since the nominee has to be specified at the demat account level, he becomes the relevant custodian of all securities in the demat account on the death of the account holder.
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