While he had diligently invested in shares and mutual funds, his grieving family was left scrambling through paperwork and legal procedures simply because he hadn’t nominated anyone for his demat account. This is not an isolated incident.
Life is unpredictable, and while we work hard to build wealth and secure our families’ futures, we often overlook a simple step that can make a world of difference after we’re gone.
The unclaimed redemption amount of mutual funds stands at ₹1,128 crore, while the unclaimed dividend amounts to around ₹2,324 crore, according to the Securities and Exchange Board of India (Sebi) annual report for 2024-25.
These remain unclaimed in India simply because rightful heirs struggle to establish ownership. Making a nomination in your demat account is a small, thoughtful act today that spares loved ones from unnecessary legal hurdles tomorrow.
A nominee is the person you authorize to receive the securities held in your demat account in the unfortunate event of your demise. Think of it as appointing a trusted person who can step in to claim your securities without unnecessary legal delays or procedural hurdles.
Nominee vs heir
However, it is important to understand that nomination is not the same as declaring a legal heir. The nominee acts as a trustee of the assets of deceased demat account holder(s) on behalf of legal heir(s). The ultimate ownership of the securities will be determined based on your will or the applicable succession laws.
Still, having a nomination in place ensures that your assets are not left in uncertainty, offering clarity and continuity when your family needs it most. It is also a good practice to periodically review and update your nomination, especially after major life events such as marriage, the birth of a child, or the passing of an existing nominee. Many investors forget to revise old details, which can lead to confusion later.
If you have appointed a nominee, the securities can be transmitted smoothly in favour of the nominee by submitting a few basic documents like:
-The death certificate of the deceased demat account holder
-A duly filled transmission request form
-The Client Master Report of the demat account of the nominee.
The nominee will be required to complete, update, or reaffirm their know-your-customer (KYC) details. This straightforward process ensures that investments are not left idle or inaccessible, allowing families to use the funds when they need them most.
Considering the benefits of nomination, Sebi made it mandatory for all sole holders of demat accounts to either nominate someone or opt out of nomination. You can nominate or opt out of nomination either online or offline. You can choose to have multiple nominees and specify the percentage share of each nominee. Digital platforms have made this quite easier, with most of them now allowing nomination updates with just a few clicks, eliminating the need for lengthy paperwork.
Once you appoint nominees, their names are entered in the records of your depository participant, the entity through which you hold your demat account. This information is stored securely in the database of depositories. On the demise of the demat account holder, nominees can approach the depository participant with the required documents for transmission. The process is straightforward. It avoids any freezing of the account, lengthy paperwork or financial uncertainty.
Repercussions
If no nomination is registered for a demat account, the process of transmitting securities after the account holder’s death becomes significantly more complex and time-consuming. In such cases, the legal heirs must produce a range of documents—such as a succession certificate, will or probate of will, or legal heir certificate, etc.—depending on the value of the holdings.
This not only delays access to the deceased’s investments but also adds stress during an already emotionally difficult time. In many instances, families either give up due to procedural hurdles or face prolonged legal battles, which is one reason why a large volume of financial assets in India remains unclaimed.
A nomination, on the other hand, acts as a simple, proactive safeguard—ensuring that the wealth you’ve built over time reaches your loved ones without unnecessary barriers. It is a small checkbox on a form, but it carries immense emotional and financial weight. It represents foresight, care, and responsibility.
Nomination may seem like a small step, but its impact is profound. If you haven’t already, take a few minutes today to register or update your nomination—it’s one of the most responsible things you can do for your family’s financial well-being.
Nayana Ovalekar, chief regulatory officer, Central Depository Services Ltd (CDSL).
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