Nomination provides right to receive asset, not ownership

It is recommended to have a will as it is important for acquiring ownership of an asset
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First Published: Thu, Nov 15 2012. 07 45 PM IST
I have physical shares of listed companies in joint names of my mother, my brother and myself. If in case one of the joint holder dies, can the shares be transmitted to other joint holders? I have a demat account that is also in our joint name and there is no nomination yet. We also have a house in my mother’s name for which nomination has been done with the society. Do I need a will for transferring to the other nominee? I have a bank locker in joint name. Would nomination be required in case one of the joint holder dies?
—Haren V. Shahin
In case of death of any of the joint holders, the surviving shareholders needs to submit a request letter to the company’s registrar/share transfer agent along with an attested copy of the death certificate of the deceased shareholder and the share certificates in original. The company’s registrar after duly checking the same will remove the name of the deceased shareholder from its records and the endorsed share certificates will be returned to the remaining registered holders after incorporating necessary changes.
The procedure will remain the same in case of shares held in demat account. The main difference would be that the request letter will be sent to the depository participant (DP) instead of the company registrar.
As your demat account is in joint names, it is advisable to have a nomination. It is also now mandatory to have a nomination in place for a demat account held by individuals. Nomination will not come into effect in case of a holder’s death for jointly held investments. It is only on the demise of all the joint owners that the nominee comes in effect.
It is believed that nomination will suffice in case of death and the asset will be transferred to the nominee. However, that is not true. Nomination is only a right to receive and not ownership; it is the legal heirs who are entitled to the right of ownership. So in case of any person making a claim over an asset, the nominee will not hold any advantage.
It is recommended to have a will as it becomes important on acquiring ownership of an asset. It is also believed that a will should be made after attaining a particular age, but there is no age of getting a will. On the contrary, it actually works better to have a will at a younger age as besides giving the advantage of transfer of ownership, the chances of anyone contesting the same becomes less as the will is held for many years.
You can change the will whenever you want. A will can be handwritten or typed and it may or may not be registered. But it is preferable to get it registered.
Remember that a will is drawn up not just for real estate, but for all assets such as bank accounts including lockers and other financial instruments.
Queries and views at
Surya Bhatia is managing partner, Asset Managers
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First Published: Thu, Nov 15 2012. 07 45 PM IST
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