What happens to the shares in a given Demat account if the account holder dies? Once an unexpected thing happens like death, like any financial account, there is a need to change rights or transfer the account to other account holders. With an online Demat account, you can change rights to the nominee into a Demat account. This post will have a complete guide on changing a nominee into a Demat account. Let’s start.

What is Demat account Nomination?

Nomination in a Demat account refers to the process where the rights of a given person are changed to a designated person so that they can continue to handle, manage or continue with the exchange or trading after the owner of the account dies.

Here two processes happen based on the types of Demat account holding. The process is based on if the account was a single individual holder or a joint account holding.

When the owner has added a nominee for the individual account holding, the holding will be transmitted to the nominee after their death. However, for the joint Demat account, the shares for the person who has died will be transmitted to the holder who is still surviving. For this process to be successful for the joint account, the holder has to present a transmission form and a copy of the deceased’s death certificate. Therefore the transmission to the nominee can only be done if the holder dies.

For the nominee to get the holdings to transmit to their account, they will have to fill in a form so that the owner can be changed. The nominee Demat account will receive the holder’s securities when the application is approved.

If the owner added no nominee to the single holding Demat account, then when the holder dies, the shares will be transferred to the family through the help of the court order. Though the process is cumbersome, the family members must fulfil all the legal formalities for it to be successful.

Now that you know what nominee or nomination is in a Demat account let’s cover how you can change the nominee into a Demat account.


How to change the nominee into a Demat account?

To change the nominee into an online Demat account, you must have previously added the nominee to the account, but you need to make some changes. Note that it will take a few minutes to update or change the nominee in the Demat account for you to change the nominee. To change the nominee into a Demat account, you will have to do the following:

  • You need to download the nominee modification form from your depository participant’s official website.
  • Then you will have to fill in the form with the updated information
  • Then signed it
  • Finally, you will have to send the filled modification form to the headquarter of the stockbroker you are using.

Note that with the Demat account, you can add up to three nominees allotted different percentages of shares; however, adding more than this number, you will have to designate the percentage of the share you want the nominee to receive.

Once your stock broker approves the modification form, the process will have gone through successful, and the nominee will have the rights you provide then in the online Demat account. Some of the rights include trade with the account holder’s shares, entitled to the same interest or dividends same as a shareholder or all membership rights. Note that the nominee can only enjoy certain benefits if the account holder dies.


Final words

As mentioned above, nomination in an online Demat account is the process of giving a person rights to monitor and manage the account holder’s Demat account after their death. Also, the account holder can keep the account together while the holder is still alive. Once you indicate your nominees, then upon the account holder’s death, the transfer process is done automatically without involving paperwork.

Therefore, if you want to open a Demat account online, you have to provide the right nominee, and if you want to change your nominee or their details, you can follow the steps provided in this article.

By Manali