Most investors think once they’ve bought shares, mutual funds, or ETFs through their demat account, the job is done. But what happens to these holdings if something happens to you? Without a registered nominee, your family may struggle to access your investments. They would have to go through time-consuming legal processes like succession certificates or a will probate, which can drag on for months or even years. A simple nomination ensures your assets transfer smoothly.
How nomination actually works
A nomination is simply the process of naming a person who will inherit the securities in your demat account after your lifetime. You can add a nominee while opening the account or update it anytime later. The nominee does not get any rights while you are alive; they only step in if something happens to you. And yes, you can even nominate multiple people, specifying the percentage each one will receive.
Legal clarity and fewer disputes
One of the biggest advantages of nomination is that it reduces family disputes. In the absence of a nominee, legal heirs may fight over who is entitled to the assets. Even if your will mentions your securities, the nominee entry in the demat account carries weight and speeds up the claim process. For families, especially when emotions are already running high, this clarity can be invaluable.
How to update or change a nominee
Updating your nominee is easier than most people think. Most brokers and depository participants now allow online nomination through Aadhaar-linked e-sign. You can also submit a physical nomination form. If your circumstances change—say, you get married, divorced, or want to add children as nominees—you can always revise the details. The latest nomination will automatically override earlier ones.
What if you don’t nominate at all?
If no nominee is added, your family has to go the long route of producing legal documents such as succession certificates or probated wills. This not only delays the transfer of assets but also costs money in legal fees. For smaller holdings, families may even abandon claims because the process feels too burdensome. That’s why nomination isn’t just a formality—it’s essential financial housekeeping.
FAQs
1. Can I add more than one nominee to my demat account?
Yes, you can nominate multiple people and specify the percentage of holdings each person will receive. This ensures fair distribution among heirs.
2. Does a nominee automatically become the legal owner of the securities?
The nominee is only a caretaker who receives the assets. If there are disputes with legal heirs, the nominee may still have to hand over the assets as per succession laws. However, having a nominee greatly simplifies and speeds up the initial transfer.
3. Can I change my nominee later?
Absolutely. You can change or update your nominee at any time, either online or through your broker. The most recent nomination replaces any previous entries.
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