Equity Portfolios need maintenance
Every month at least one or two Chartered Accountants / Investors call me asking “I have a client (father / mother..) who died recently and has a big bunch of shares / mutual funds / etc. will you please tell me if there is some service provider who will sort it out?”
And my answer is : No. I do not know of such a service being available.
Last week I happened to visit a friend whose neighbor’s post was lying in this friends house. THE neighbor had died about SEVEN (7) years ago. Still the dividends were coming in the name of that person, his wife (also dead), cheques, mutual fund statements, balance sheets, were lying unattended. I know the children – they just do not respond. The have sold the house, but obviously not changed the address. I am not sure whether the cheques can even be encashed.
THIS happens to every portfolio of the pre demat era. Also to those portfolios where people have not got the shares dematted. Children who do not care about the shares when their parents are alive should be willing to write them off. This bunch of shares that I saw included 2000 shares of a shipping company. When we had bought this share it was a good dividend yield share – I guess he bought it for about Rs. 8 or 9 and used to pay dividends too.
Now the share price is Rs. 540. The children have no clue about how much is their parent’s portfolio worth.
My guess ? it is upward of Rs. 1 crore and every year about Rs. 3 lakhs of cheques are going uncashed.
Is it my business to tell this to the kids? Hell no. None of my business.
So if you have shares in your house in non demat form please convert it to demat form. That is a good first step.
Anand Doctor
Yes, in fact, there are dividends in the thousand of crores lying unclaimed. Most of them will just get added to the Investor Protection Fund.
Having gone through the tedious process myself, I have now started offering such a service for others who need it(Mumbai only).
Anil
I have a question on similar lines. My father has a joint account with my mother in ICICI Direct and my mother expired few years back. He doesn’t have any interest in these shares and wants to either transfer to my name or sell it. I asked him to transfer to my name as he doesn’t need the money and he has started investing in mutual funds.
However, broker (ICICI Direct) said he can’t transfer directly to my name, the only way is:
1. Create a new demat account in my father’s name only. My father can then transfer to this new demat account.
2. Then, he can transfer from the newly created demat account to my account.
I don’t understand why we need step 1, though we have all the required documentation. Is there any way to bypass step1?
Renga
Subra Sir
Sorry if this is obvious, does converting to demand applicable to mutual funds too, I don’t hv any direct investment but I do hv MF iin my portfolio so want to know if it’s good to get MF converted to demand form.
Arhant
Dear Renga:
You cannot hold mutual fund units in demat form, but it is paramount that you specify a nominee for your funds and it is a good idea to let the nominee know about it.
I find it easier and a good idea to just get statements every quarter and discuss it with all parties concerned to make sure we are on the same page.
Best
A
passionateaboutretail
considering that there is a requirement of a such an individual who helps in handling the documentation its really surprising that there is none.
Deepak
Subra,
my father passed away 18 years ago and we still have shares from his time in his name. I am from the financial services industry and know the value of the same – but trust me if I was up the shit creek in frustration at what all is asked to do a transmission, I can only empathise with the rest of the people. Companies these days ask for IT returns of the sureties on the indemnity deed for effecting transmission of 10000 worth of shares. after spending 1000 on affidavits and random stuff…. its just too painful and not worth the effort below a certain threshold.
Sethuraman
Anil: No you cannot bypass the step, the Icici bank is correct.
Renga: there is NO need to demat your MF holding. Makes no sense. As long as you have an Either / Survivor mode of holding and you have a nominee in place, it should be fine.