ESTATE PLANNING ISN’T COMPLETE WITHOUT NOMINATION: Make it easy for your heirs to get your money when you are gone

financialexpress.com:

Out of 136.4 million single holding demat accounts, around 99 million or 72.5% do not have any nomination details, a consultation paper by Securities and Exchange Board of India (Sebi) shows. In case of joint holding demat accounts, 37.2% do not have any nominations.

The negligence or lack of awareness about the importance of nomination among investors has forced the markets regulator to extend the deadline for submitting  the nomination details for their demat account and mutual fund units in the last one year. The latest deadline is June 30, 2024. It has warned that accounts or folios without nomination details after this date will be frozen.

However, mutual fund investors have shown better adherence. In case of single holding mutual fund folios, only 14.2% of them do not have nomination. And for joint holding mutual fund folios, 34.2% are without nominations.

Importance of nomination

Nomination enables an individual investor to nominate a person, who can claim the securities held by him in demat accounts or redeem the mutual fund units after his demise. Initially, the Sebi had set a deadline of March 31, 2023 for account holders to nominate beneficiaries or formally opt out. The regulator extended the deadline to September 30, 2023, then to December 31, 2023. As many investors have failed to comply with the directive, it extended the deadline to June 30, 2024.

Without a valid nomination, the process of accessing demat account holdings becomes time-consuming for legal heirs, says Vishnu Chundi, founder and CEO of AasaanWill, an online will writing platform,  “If there is no nomination in place, financial institutions would require proof of title or a succession certificate issued by a competent court,” said Chundi.

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