In a lively Mumbai household, the Sharma family often gathered around the dining table, passionately discussing their latest investment ideas and stock market trends. However, managing their investments became a challenge. Each family member had their own Demat account, leading to scattered portfolios and complex coordination when making joint investment decisions.
This common frustration is shared by many across India, where investing is often a family affair. The solution? A joint Demat account. It allows families to consolidate their investments into a single account, making it easier to manage and align their financial strategies seamlessly.
In this article, we explore how to open a joint Demat account, which will allow you to streamline your family's investment process and make collective decisions easily.
Can a Demat account be a joint account?
Similar to all other accounts such as mutual funds, bank accounts, and fixed deposits, the Demat account can also be a joint account. The only requirement here is for both parties to be residents of India and have valid Indian IDs.
The person who opens the Demat account will be the primary account holder of the joint Demat account.
What is a joint Demat account?
The joint Demat account rules are similar to all other joint accounts. Its main characteristics are listed below:
- The maximum limit for the accountholders in a joint use Demat account is 3.
- The person opening the account is the primary account holder, and the other 1 or 2 people are the secondary account holders.
- Every account holder must verify the account transactions.
- In case one of the joint holders passes away, the ownership passes to the other joint holders.
- In case when all the joint holders pass away, the account passes to the nominee.
Invest right, invest now
By opting for a joint account, it becomes simpler to manage finances together without keeping track of investments individually for all the family members. You can also explore the AMC free options and keep a close eye on the ledger balance in Demat account.
You can also invest in a joint stock company with this account.
How to open a joint Demat account in India?
Most steps to open a joint Demat account are the same as those to open an individual Demat account. The steps include:
- The application for a joint Demat account must be printed, filled out, and submitted at the depository participant's branch or online. While filling out the form, choose whether you wish to open an individual or a joint Demat account.
- The form will have a column for the first account holder's correspondence address. The correspondence will take place entirely with the first or the primary account holder.
- Submit the KYC documents and passport-size photographs of all the joint account holders.
- All the account holders must submit proof of their address, PAN cards, and identity proofs.
- Make sure that all the joint account holders sign the form and then upload it online. You can also physically submit the form to the broker's office.
- After the broker has verified the account information, you will be given the joint Demat account details, which you can use to log in.
Keep in mind that an individual Demat account cannot be converted to a joint account. The joint account option must be selected at the time of opening up a Demat account itself. The only way to add another individual to the account later is to add them as a nominee. However, they will have no control over the account in this case.
Benefits of joint Demat account
With an understanding of the joint Demat account rules, let us now look at the benefits of opening this type of Demat account. This account is ideal for accountholders who wish to pool their resources and collectively handle their stock market investments. It can also help individuals in estate planning as the ownership of the account passes to the other holder in case of the demise of one account holder.
The core benefits of joint account holders include:
- All the accountholders can keep track of the account and the transactions made using it.
- All the account holders can make contributions to the Demat account and collectively make decisions about using the funds.
- It is possible to benefit from various investment opportunities together in a joint account.
How to add a joint holder to a Demat account?
The best way to add a joint holder is to reinitiate the Demat account opening process by setting one account holder as the primary and others as secondary. As soon as the KYC of all account holders is complete and the form filled and submitted, they can start using the joint Demat account.
Conclusion
A joint account helps different account holders benefit from the finances, pool in their resources and contribute towards the diction making. Even though there are multiple account holders, it is crucial to have an account nominee in case of the demise of all account holders.
Keep in mind that opening a joint account is only possible at the beginning. The only way to add another holder is by adding them as a nominee. As a result, it is a crucial decision which must be taken timely to ensure the best usage.
You cannot transfer the shares to the new account till the new joint account has been set up. It is crucial to ensure that the process is done timely by keeping all the accountholders informed.
