You must already be aware of the fact that a demat account is mandatory for investing in the stock market, right? But, did you know that a demat account can also be opened for minors? Yes, you read that right. Minors, although incapable of entering into contracts, can open a minor demat account through a guardian. Also, the guardian of the minor account will be responsible for operating the account and taking care of other formalities on behalf of the minor.
But then, what would happen if the guardian of the demat for minors account faces an untimely death? That’s exactly what we’re going to be looking at in this article. However, before we actually get to the main part of the article, let’s quickly go through the process of opening a minor demat account.
How to open a minor demat account?
To put it simply, the procedure for opening a demat for minors is the same as that of a regular account. The only difference is that the KYC formalities laid out under the demat account opening process would have to be completed for both the minor and the guardian.
Also, all of the signatures in the account opening form and the supporting documents would have to be made by the guardian and not the minor. And since it is a minor account, it is mandatory to specify the age of the minor along with proof. Since the account is going to be in the name of the minor, the PAN of the minor as well as that of the guardian have to be disclosed.
Also, here’s something that you may not be aware of. A minor demat account cannot be used for intraday trading or derivative trading. It can only be used for equity delivery trades alone.
What happens when the guardian of a minor demat account dies?
Okay so, now that you’re aware of how to open a minor demat account, let’s take a look at a case where the guardian of an existing account holder dies.
In such an event, a notarized copy of the death certificate of the guardian has to be submitted to the depository participant as soon as possible. Upon submission of the death certificate, the minor demat account will be temporarily frozen until a new guardian is formally appointed and the requisite documentation for the same is completed. Once a new guardian is appointed, the account will be unfrozen and be made available for regular equity delivery transactions once again.
Alternatively, the minor could choose to not appoint another guardian and continue to hold the frozen minor account till the time they attain majority. In that case, upon attaining majority, the now major individual has to fulfill KYC and account opening norms once again. Once the formalities are all complete, the guardian’s name will be removed from the account and the rights to operate the account will be transferred to the existing account holder.
Conclusion
If you want to open an online demat account or a demat for minors, visit the website of Motilal Oswal right away. You can open the account online using a completely paperless process within just a few minutes. That’s not all. Demat account opening on Motilal Oswal is completely free too.
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