A strange incident took place in my neighborhood recently. Two sons of Mr. Tripathi started shouting and fighting with each other after mere two days of their father's death on the matter of his life insurance claim amount. Friends and relatives mediated to stop the unpleasant situation. After much persuasion, they zeroed in to have a look on the claim amount first before deciding anything. Then, one of Mr. Tripathi's friends asked for the policy documents. Mrs. Tripathi denied of having the papers so as both her sons. They had heard about the policy premium few times, but never tried to know the details of his policy. Nobody knows how much this carelessness has cost to Tripathis. That precious amount may have helped a lot to his still not settled sons, but it was not.
It is not a story but a true incident and may happen with anybody in one form or other. Tripathis faced problem due to their unawareness about policy papers, Batras may face difficulties due to lack of information about bank locker's key. Death is a cruel truth and nobody can deny it. In addition, nobody can predict its timing. Hence, one shouldn't hide these all after a point. Srinivasan TS, Bengaluru-based Certified Financial Planner & Chief Consultant at WealMan Associates, says, "There is no point in delaying to tell finance-related information to near ones. If you haven't done it yet, do it now." We save and invest money for hard times of our families. Hence it is our duty to ensure that saved and invested money works up to its full potential and reaches to those hands for which it is intended. One should discuss about all his investments with his close persons. It addition, one should talk about assets and liabilities as well with them. If one has made his will, there is no point in hiding this fact. Let us discuss these one by one.
Most of us inherit rural land from our forefathers in one form or another. There are chances that next generation doesn't know about these lands at all. As a father, it is your duty to make the child know about your farms and ancestral lands. In addition, children should be told the whereabouts of the documents related to these properties.
When we start saving bucks, we open savings account in a bank or post office. One should discuss his bank accounts with at least one family member, who is close to him. However, banks forbid their customers from sharing the information related to bank accounts. They strictly prohibit sharing the pin number of ATM Card and password of net banking with anyone. But their intention is to save the customers from fraudulent activities. But, as a family member one should keep faith on at least one family member.
Allow me to discuss another incident which happened with Mr. Saxena last month. On a fine evening, he fall down while dining and went unconscious. His son was there only and he, with the help of his mother, carried him to nearest hospital. Doctors told them that a surgery was very much essential. But neither the mother, nor the son had enough cash for that. However, Mrs. Saxena had his husband's ATM card, but she didn't know the password. Few relatives came forward and helped them to save Saxenas. Mr. Saxena is enjoying his life at fullest no doubt, but such incidents give us a lesson on small things we should care about. We keep important documents and jewellery in bank lockers. Hence a small key of bank locker holds significant value with it. It is essential to share the place with at least one family member where you put the key. For safety purpose, don't put the documents and key together. Keeping these at different places will save you from any fraudulent activity from any outsider.
Investment and Insurance
Now let us talk about investments. Investment in property has always been hotcake for us. As an investor, you should share the information of all the properties, in which you have invested, to your near and dear ones. In addition, we keep on buying various insurance policies from time to time. Besides, we invest in bonds, KVP, IVP, NSC, mutual funds and stock market. One should keep all the documents related to these safely. It is always better to have your passport or pan card with these. To keep these safe, one may keep these in his bank locker. These may be kept in any specific place of your house as well. One should share all the investment and insurance related information with at least one member of the family. Too much confidentiality would create such a situation where your near and dear ones would get nothing from the money you are saving with so much pain.
Anshika Mehra, Financial Planning Analyst at Ameriprise Financial, suggests another way as she says, "One may keep scanned copies of all these documents on his Email ID and this should be in knowledge of at least one nearest person. These scanned copies would be of great help in case one couldn't get the original ones in case of any unprecedented untimely event." There are people who keep a small diary with them and keep on updating that sequentially every time they make an investment or buy any insurance policy. If you are a computer savvy person, you can do it on excel sheet and keep on updating that. This should be on your personal computer as well as your Email ID.
If you are sharing the information of your properties and investments with your next generation, you must tell them about your liabilities or debts as well. Your close ones should know about all your debts whether these are taken from financial institutions or from friends or relatives. If you borrow money from your relative or friend, note down that on your diary. When you return the money, don't forget to mention that with the date and amount. Not only this, follow the same if you have lent money to any friend or relative. It would be of great help after any untimely incident.
Borrowing is a habit nowadays and nobody is able to elude it. Most of us have at least one loan and number of persons carry multiple loans at a time, subject to their repaying capacity. Best possible way of reducing this burden is to insure all the debts you have taken. For example, if you have taken home loan, you have created a liability for yourself. Srinivasan says, "In case something happens to you, the loan will still have to be paid back through your regular EMI payments. If no surviving member of your family can continue to repay the loan, the lender can take away your home. Therefore, you must get insurance on your home loan. This ensures that your family or dependants do not have to worry about the loan repayment and your home will not be taken away."
Only writing a will is not sufficient. It is equally important to ensure that your dear ones know about it well in time as unfamiliarity about this creates a number of legal and emotional problems among family members. Hence, it is always better to give them prior information about it. Few people don't think it is a right way as (in their opinion), it may spoil the peace of the family. Such persons should take a close friend or a reliable lawyer into confidence. This friend or lawyer should not only be given responsibility of informing about the will, but also the role of executor. This person should watch carefully that things are executed well in line of your thinking. Now the question is- where should this will be kept? It can be kept in the locker of bank. If one doesn't want to keep it in locker, he may keep it with the person whom he has given the responsibility of executor.
Besides all these things, one more thing is of utmost important in this context. Mere sharing information with near ones about investments, assets and liabilities is not enough. Srinivasan says, "If you really care your dear ones, it is not enough to provide them information about it, making them nominee is equally important. It would of great help for them." Generally we don't care about making nominees and avoid it while opening a bank account or while investing in any financial instrument. Such habit proves to be disastrous. One must change this bad habit as early as possible.