Death of a stock market investor: How family can access shares of deceased

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The pall of gloom around us is refusing to go away. The Covid-19 threat is refusing to go away with the pandemic’s second wave raging on.

Untimely death in the family is devastating. However, once the mourning is over, families have to get back to normal life. What if the family member who died had a lot of money locked in stocks and which one might need to access for liquidity, be it immediately or in the future?

Money9 spoke to a few capital market players to help you understand what you need to do in different scenarios where the deceased has mentioned a nominee or not mentioned a nominee and also the process if there is an absence of a Will.

If there is a nominee

The transfer of shares is an easy process in the event the deceased has mentioned a nominee. “Transmission of securities where nomination has been made eliminates the need of cumbersome legal documents such as Will, Succession Certificate etc,” said Mohit Nigam, Head, PMS, Hem Securities.

The process of transfer of shares has to be done through the Depository Participant (DP) holding the shares. “Upon the death of the sole client (in case of securities held singly) or the death of all the clients (in case of securities held jointly), the nominee must request the DP in writing along with a certified true copy of the death certificate and transmission request form (TRF) to transmit the securities covered by the nomination to the account of the Nominee. The DP will ensure the completeness of the form and validity of the signature of the client and then execute the transmission request,” Nigam pointed out.

In the absence of nominee

Vineet Patawari, co-founder and CEO, Stockedge and Elearnmarkets, said in the absence of a nominee the requirements for transfer of shares are different if the value of securities held is up to Rs 5 lakh and above Rs 5 lakh.

For securities up to Rs 5 lakh, while Death Certificate signed by a notary, filled in TRF will be required, the claimant will also have to provide a succession certificate claiming the rights of the heir to be notarised in case the deceased hasn’t left a Will or a nominee. “One should file a petition for Succession Certificate of the deceased soon after as it takes 6 months,” Patawari said.

Along with this, one has to provide a no-objection certificate (NOC) from all other legal heir(s), an affidavit on a non-judicial stamp paper and a letter of indemnity along with a guarantee of independent surety acceptable to the DP on a non-judicial stamp paper.

If the market value of securities exceeds Rs 5 lakh, the DP may insist on Probated Will or Surety form.

If there’s more than one claimant

Nigam said if there is more than one claimant, the claimants/successors have to submit one Transmission Request Form along with a NOC from all legal heir(s) who are not applicants conveying no objection to the transmission of the relevant securities in favor of the applicant(s)

“As an alternate to NOC, a copy of Family Settlement Deed notarised or attested by a Gazetted Officer and executed by all the legal heirs of the deceased can be submitted. The deed should clearly vest the securities in favor of the person seeking transmission in his/her name,” Nigam said.

If the division of shares as per the Family Settlement Deed is among more than one person, then the Family Settlement Deed can be considered as a NOC for transmission of shares to each legal heir applying for transmission, he said.

If the legal heir/nominee is a minor

If the nominee is a minor, the signing authority shall be with a guardian. “The shareholder can appoint another person, usually guardian, who will be transferred the shares until the legal heir/nominee turns 18. The legal heir then gets a limitation period of 3 years after turning 18 years to transfer the asset to their account,” Patawari said.

In addition to the name and photograph of the nominee, the name, address and the photograph of the guardian must be submitted to the DP, Nigam added.

For all this, however, a demat account for transferee is compulsory for the transmission.