You can better manage your investments and facilitate tax planning by adding nominee to your Demat account. But if this is your first time doing this, adding nominations to your Demat account can be complex and challenging.

Nevertheless, it is a useful facility if executed with the proper knowledge. Let us learn further.

What is a Nominee?

A nominee is a person chosen to receive securities or other assets if the original holder of those assets passes away. The beneficiary’s consent is not necessary for the nomination to be made by the account holder at any time. However, Demat accounts tend to be more secure with the nomination facility.

Note: You can open a free Demat account online with zero annual charges with Shoonya. 

Why is having a nominee recommended?

Listed below are some points highlighting the reasons for having a nominee. 

• It will aid in ensuring a seamless transfer of your assets after your passing.
• If you become incompetent, it could help hasten the asset transfer procedure.
• It may help prevent disagreements between your heirs over who should receive your possessions.
• In many situations, the law demands it (depending on your state).
• A selected beneficiary on your insurance policy could stop any coverage lapses.
• It is significant to note that most custodians demand that their clients name a beneficiary.

Is there any nomination facility in Demat accounts?

As per the guidelines by CDSL, all individual Demat accounts are eligible for the nomination facility. Therefore, it is recommended that all individual BOs use this facility. However, if a specific BO decides not to nominate, SEBI has stipulated that the account holder(s) must make a written and signed declaration to that effect.

You can visit CDSL for commonly asked questions about the nomination facility available for Demat accounts.

How to add a nominee to your Demat account?

An instruction manual for adding a nominee to a Demat account is provided below:

• First, use a biometric or 6-digit PIN to log in.
• Select “Account” first, followed by “Profile.”
• Next, locate “Profile” and select “My nominees.”
• When you click “Add nominee” or “Opt-out,” you will be taken to the “Nominee information” page.
• Enter the nominee’s information, and then click “Continue.”
• Next, upload the nominee’s ID documentation.
• Enter the “Nominee share in%” you intend to give to that nominee after the documents have been uploaded. Note that you can add as many as three candidates to your account.
• You must include information about the nominee’s guardian if they are underage.
• Once every nominee has been added, click “eSign using Aadhaar OTP.”
• Within 24 to 48 hours of completing the document verification process, your nominee request will be approved and added. 
• A confirmation email or SMS will also be sent to you.

Things to keep in mind while adding a nominee 

When adding a nominee to your Demat account, you should remember a few things.

• The candidate needs to be an individual, not a corporation, partnership, trust, or other types of organisation like a HUF or body corporate.
• Your decision on the nominees’ rights in the Demat account must be made after you have assigned a nominee.
• The nomination form needs to be signed by each account holder for a joint Demat account.
• Three nominees are allowed to be chosen. You can choose the ratio stock or other assets that should be handed to each candidate if the account holder passes away.
• Nominees may not be selected for Demat accounts of non-individual entities. Holders must only be an individual.
• Choosing a minor to serve as a nominee is feasible.
• Additionally, nominees may be changed or eliminated at any time.

Conclusion Adding a nominee to your Demat account takes only a few minutes. Additionally, if something were to happen to you, it might make things simpler for your loved ones. Thus using the nomination facility for your Demat account not only reduces your risk but also safeguards your holdings.