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Top 3 Ways to Transfer Demat Account When The Investor Dies

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Every person wishes to pass on their assets to their loved ones in the simplest way possible. The common goal of any investor is to provide financial security to his family after he dies. However, knowing how to transfer Demat account is a rare knowledge that a few investors possess. Before we dive into how to transfer  Demat account after a loved one dies, let us first define a few terms.

A Demat account or a Dematerialized account (if you are not aware) is one where you keep your shares/debentures in electronic form. It is a mandatory prerequisite by SEBI to trade shares.

Presenting the simplified process of claiming shares/debentures held in a deceased’s Demat account. Know all about the requisite documents and procedures. Before we proceed further, it is essential to understand the role of a DP or Depository Participant. A DP is responsible for the security of the electronically held shares and the transfer of shares or debentures.

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You are probably wondering if you can transfer Demat accounts. The answer is an emphatic Yes. You can adopt an online or offline mode for transferring your Demat account. Now the next question is how to transfer the Demat account. The process is quite simple. You can choose an offline or an online mode to transfer shares from one Demat to another.

How to transfer Demat Account Offline?

For the Offline process to transfer the Demat account, both your existing and the new broker must affiliate with different depositories.

  • Prepare a list of the stocks you wish to sell
  • Take note of the ISIN number. Use this 12-digit number to identify equity, bonds, and stocks.
  • Take note of your Target Client Id.
  • Choose the appropriate option from Off Market Transfer or Inter Depository Transfer.
  • Fill out the DIS (Debit Instruction Slip) and send it to your broker. You will get an acknowledgment in return.

How to transfer Demat Account with CSDL?

You can also opt for the online process to transfer Demat account, provided you trade solely with CSDL.

  • Go to the CSDL website and select “Register Online.”
  • Fill out the given form correctly.
  • You will find an option to print the form in the drop-down menu.
  • As you finish the process, your Demat account gets transferred to the Depository Participant (DP).
  • You get a login password in your registered email when your request gets approved after due verification.
  • Log in with the password, and you can transfer the desired shares.

Only the investor holds the capacity to transfer shares. It raises the obvious question of how to transfer the shares after the investor’s death. Don’t worry. We are here to answer your questions; just keep reading. In the event of death,

For single account holders:

  • Nomination facility availed.
  • Nomination facility not availed

For Joint account holders:

  • One of the account holders is surviving
  • Both joint account holders have passed away.

Case 1- Process for transfer of shares when Nomination facility availed in Demat account

You can use this option only if the sole investor dies or all account holders die if the securities are jointly held. The nominees must submit the following documents to facilitate share transfer:

  • Request for transmission of units duly filled and signed by the nominees.
  • Canceled cheque with Nominee’s name printed or Nominee’s- Bank Passbook/Statement.
  • KYC documents
  • Certified True Copy of Death Certificate
  • Copy of Birth Certificate (if the nominee is a minor)
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Case 2- Process for transfer of shares when Nomination not registered in Demat account held singly

Claimant can be-

  • A legal Heir
  • Successor to the estate of the deceased
  • The administrator of the deceased’s estate.

When the market value of the shares is up to 5 lacs –

The legal heirs/ legal representative must submit the simplified documents below for the transfer of shares-

  • Copy of death Certificate duly attested by Notary Public or a Gazette Officer.
  • Letter of Indemnity
  • Notarized Affidavit on Non-judicial stamp paper of appropriate value duly signed by each legal heir. It should mention the identity and legal ownership of the financial securities.
  • No Objection Certificate from all the legal heirs/ legal representatives
  • Client Master Report (CMR) of the claimant
  • Family Settlement Deed in the prescribed format(in case NOC is unavailable)

In cases of transfer of shares where the market value of the shares exceeds 5 lacs

  • Notarized Copy of the Probate of the Will/Succession Certificate / Court Decree / Letter of Administration. (You have to submit a legal Heirship Certificate or its equivalent if the will specifies the beneficiary’s name)
  • Additionally, the beneficiary receiving the transmitted securities will submit an indemnity bond.
  • Client Master Report (CMR) of the beneficiary (including all the client’s information and the Demat account).
  • Copy of Death Certificate attested by Gazetted Officer or Notary Public
  • A notarized affidavit on fair value non-judicial stamp paper.
  • No Objection Certificate (NOC) from the remaining legal heirs regarding the relinquishment of their ownership stake.

Case 3- Process for transfer of shares when Nominee not registered in Demat account held Jointly

If one of the joint holders dies, the surviving account holder will receive the securities in the account.

  • The surviving holder must give a written request for transfer in a Transmission Form.
  • Notarised Copy of death Certificate.
  • Client Master Report (CMR) for fresh online trading account opening.

After the successful transfer of shares, the DP closes the Demat account of the deceased. The threshold for the transfer of shares in case of Death of the Demat Account Holder.

To simplify the process of transfer of shares, the SEBI has revised the existing simplified document thresholds. In the case of physical shares, SEBI has increased the simplified document threshold limit from 2 lacs to 5 lacs.

In the case of Demat shares, SEBI has increased the threshold limit for each beneficiary from 5 lacs to 15 Lacs. SEBI made these changes to facilitate the transfer of shares by listed companies or Share Transfer Agents (RTA). SEBI has modified its Listing Obligations and Disclosure Requirements (LODR) to standardize the process of transmission.

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FAQs

How to sell shares of a deceased person?

Only the legal heir or nominee, have the right to sell the deceased’s shares. For effecting the transmission of shares to your Demat account, you must complete the prescribed procedure After the successful transfer of shares, you get an email notification and the login password.

How Can Nomination Benefit in Transfer of Shares in Demat account?

If you avail of Nomination, your legal heirs can bequeath your shares/ debentures in a much-simplified manner. You earn peace of mind that your investments are safe and will easily reach your loved ones. Your loved ones save plenty of money and time in completing the legal documentation.

How do you add a nominee to your Demat Account?

Adding a Nominee to your Demat is quite simple. Most of the DPS ask you to fill in nominee details at the time of online trading account opening. Even if you skipped the Nomination, DPs can still cover you.
 
Step 1- Login with your PIN or biometric to your online Demat account portal.
Step 2- Go to “My Accounts” and then your “Profile”.
Step 3- The system then redirects you to the “Add Nominee” page. Here you can fill in the nominee-related information or select “Opt Out”.
Step 4- Upload the KYC documents of the nominee. You can add up to 3 nominees here. Mention the nominee percentage.
Step 5- After you complete the process, authenticate through “e-sign with Adhaar” (if you have linked your mobile number and Aadhar)
Step 6- Your DP may take 24- 48 hours to verify the uploaded documents and approve the Nomination. Once done, you will get an intimation in your registered mail/mobile number.  

Can non-individual entities appoint nominees in Demat?

No, the nomination facility is exclusive to individual accounts only.

What is the timeline for the transmission of shares?

 After receiving the duly completed application, the DP must complete the transfer of shares –
 ●        within 7 days for Demat and
 ●        21 days for physical share.


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