Family Settlement Deed
A deed dividing a deceased investor's property among family, accepted by a DP as a faster transmission route for securities up to Rs 15 lakh when a Will or succession certificate is unavailable.
In plain language
Transmitting a dead investor's securities normally needs formal legal proof. A Will. A probate. A succession certificate. A Legal Heirship Certificate. Getting any one of these can take months, sometimes years.
For smaller holdings, there is a faster route. Legal heirs who cannot produce the usual documents may use a Family Settlement Deed instead. This route only applies if the securities are worth not more than Rs 15 lakh. A few supporting papers go with the Deed.
The Deed itself must do one clear thing. It must give the securities to the person claiming them. It must not attach any other condition to that gift.
How it works
The Family Settlement Deed sits inside a defined list of alternatives a DP may accept when legal heirs cannot produce a Will, probate, succession certificate or Legal Heirship Certificate, and the market value of the deceased's securities in each account, as on the date of application, does not exceed Rs 15,00,000. The other documents needed alongside it are: the transmission request in the prescribed form; the original or an attested death certificate; a self-attested PAN copy of the claimant; and at least one of a Letter of Indemnity, an Affidavit, or a No Objection Certificate from all non-objecting legal heirs.
The Deed itself must be duly attested by a Notary Public or a Gazetted Officer. Two specific conditions attach to its content: it must clearly vest the securities in favour of the person seeking transmission, and that vesting must not be contingent on any other onerous condition written into the Deed. If the Deed divides the securities among more than one person, it can be treated as an agreement among the legal heirs for transmission of securities to each of them individually, rather than as evidence for one claimant alone.
A worked example
Mr Joshi dies leaving Rs 12,00,000 worth of securities in his sole-name demat account, and no Will. His three children cannot locate a Legal Heirship Certificate quickly and want to avoid a lengthy probate process.
Because the holding is under the Rs 15 lakh ceiling, the DP can accept a Family Settlement Deed, signed by all three children, dividing the Rs 12,00,000 in agreed proportions — say Rs 6,00,000 to the eldest and Rs 3,00,000 each to the other two — notarised by a Notary Public, along with the death certificate, PAN copies of each claimant and a No Objection Certificate confirming none of them objects to the split. Because the Deed divides the holding among all three, the depository treats it as an agreement among the legal heirs and processes transmission to each child's own account in the stated proportion.
Had Mr Joshi's holding instead been worth Rs 22,00,000 — above the Rs 15 lakh ceiling — this Family Settlement Deed route would not be available, and the children would need a Succession Certificate, probate or an equivalent formal document instead.
Why NISM asks about it
Chapter 6, section 6.3.2 (Transmission of Securities held singly in the Depository without nomination), lists the Family Settlement Deed as one alternative route within the Rs 15 lakh simplified-transmission framework, alongside the Letter of Indemnity, Affidavit and No Objection Certificate.
Expect a question on the value ceiling for this simplified route (Rs 15 lakh) and on the two conditions the Deed itself must satisfy — clear vesting, and no onerous condition attached to that vesting.
Common exam traps
- Rs 15 lakh is a per-account ceiling on the market value of securities, tested against the date of the transmission application, not a lifetime or aggregate figure.
- The Deed must vest the securities clearly and unconditionally in the claimant's favour — a Deed that makes the transfer contingent on some other family arrangement does not qualify.
- A Family Settlement Deed dividing securities among more than one heir is treated as an inter-heir agreement, letting each heir's share transmit to their own account, rather than requiring one document per claimant.
- This route is an alternative to, not a replacement for, the Legal Heirship Certificate or Succession Certificate routes — it applies specifically when those documents are unavailable and the value is within the ceiling.
Check yourself
1.Where legal heirs cannot produce a succession certificate or equivalent, the DP may process transmission on a simplified basis if the market value of securities in each account of the deceased does not exceed:
- a)Rs. 5 lakhs
- b)Rs. 10 lakhs
- c)Rs. 15 lakhs
- d)Rs. 25 lakhs
Show the answer
Answer: (c) Rs. 15 lakhs
In case the legal heir(s)/claimant(s) express their inability to produce either of the documents mentioned above and if the market value of the securities held in each of the accounts of the deceased BO as on the date of application for transmission is not more than Rs. 15 lakhs, or such other amount as may be specified by the depository or SEBI from time to time, DP may process the request for transmission of securities on the basis of the following documents.
Two features of the threshold matter. It is applied in each of the accounts of the deceased, separately rather than in aggregate. And it is measured as on the date of application for transmission — not at the date of death.
The documents accepted instead:
a. Request for transmission in the prescribed format b. Original or copy of the death certificate duly attested by the legal heir(s)/claimant(s) subject to verification with the original or copy of the death certificate duly attested by a Notary Public or by a Gazetted Officer c. Self-attested copy of PAN Card of nominee, issued by the Income Tax Department d. Any one or more of: a Letter of Indemnity made on appropriate non judicial stamp paper; an Affidavit made on appropriate non judicial stamp paper; No Objection Certificate(s) from all the legal heir(s) who do not object to such transmission; or a Family Settlement Deed duly attested by a Notary Public or by a Gazetted Officer.
The same ₹15,00,000 figure applies where a Will is produced, with a Letter of Indemnity and an Affidavit on non-judicial stamp paper.
What the concession replaces: a copy of the Succession Certificate or Probate of Will or Will or Letter of Administration or court decree or Legal Heirship Certificate (or its equivalent), as may be applicable in terms of Indian Succession Act, 1925.
Where this is taught
Free preparation for NISM Series VIRelated terms
- Deletion of nameRemoving a deceased joint holder's name from a demat account so the surviving holders can continue the same account, instead of opening a new one, provided the request reaches the DP within 365 days of death.
- First holderThe first-named holder of a joint demat account: all communications, dividend and interest warrants, annual reports and meeting notices go to them, though beneficial ownership vests in all joint holders.
- Incapacitated investor mandateA mandate letting an investor with a single-holding account empower a nominee to operate it when physically unable to sign but still able to contract, subject to DP verification and a medical certificate.
- Family settlementA voluntary agreement resolving disputed or rival property claims within a family — treated as neither a transfer nor a gift, so it escapes capital gains tax and clubbing provisions.