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BASL Registration Number: 1951 | Non-Individual RIA. Regn No. INA000017620 | Validity Perpetual

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Letter from a Widow, the sequel!!

After publishing my last blog on a letter from a widow, I got a lot of responses from many of my clients expressing interest and concern for their own situations. Hence I am posting this article on how one can protect one’s loved one in case of such kind of unfortunate but certain events.

First and foremost, have a physical set of all the documents which prove existence of your assets, e.g.

  1. Bank Statements , Netbanking login ID & password

  2. Insurance policies, both Health and Life insurance with contact no. of the Insurance Agent (Document for claim Process)

  3. Bank locker details with Password

  4. Demat account details with login ID and password

  5. Mutual Fund statement, Post office/ PPF passbook and bank/Co. FD receipts

  6. Your house and/or any other real estate papers e.g. agreement, society share certificate

  7. Your car papers

  8. Details of any loan given to any friend/ relative with payback details

  9. Details of loans obtained from bank, financial institution with payment schedule details

The above list is indicative and not exhaustive. If some of the above documents like House papers/insurance policy are in the locker, copies of the same to be kept in the house. Needless to say that, your spouse needs to know the location of all above documents. Involve your spouse in your financial matters and introduce her/him to your Financial planner, Chartered Accountant, Lawyer.

As far as electronic devices like laptops, cell phones are concerned, inculcate the habit of having a periodic back up personal data (log in IDs, Passwords of you mail accounts as well) stored in the same. The spouse has to know the location of this back up.

Always, but always cover your big ticket loans like home loans, car loans with adequate insurance cover.

Transfer of property:

  1. Check your nominations. Before marriage you may have nominated your parents/siblings. After marriage whether you want to continue the same?

  2. Post marriage, have you explored the possibility of holding your assets jointly?

There are instruments which you can use to transfer your property to your loved ones without much of a hardship to them. A brief description of the same is as follows:

  1. Wills

A simple hand written Will specifying details of property owned by you and clear direction as to ownership of the same on your demise, normally serves the purpose. It is necessary to obtain signature of witnesses on the Will when you sign the document. (A beneficiary in the Will cannot be a Witness!)

However, to make matters foolproof, it is advisable to seek a qualified lawyer’s help in drafting a will. The decisions as to registration of the same etc can be taken in consultation with him.

One of the important points to bear in mind while preparing a will is: Appointment of an executor in the will. Executor is responsible for carrying out the directions given in the will and distribution of the property mentioned in the will as per the wishes of the person writing the will.

Important Note:

  1. As far as Demat Account is concerned, the right of the nominee supersedes that of a beneficiary mentioned in the Will. This means, if in the Will you have cited Mr.X as beneficiary of shares in a Demat Account and you had nominated Mr.Y while opening the same Demat Account; when you are no more, the shares will be transferred in the name of Mr.Y, the nominee and not Mr.X, the beneficiary designated in the Will which was made subsequent to the opening of the Demat Account.

  2. In any case, please ensure that the beneficiaries of an asset in the Will and your Nominees of that particular asset are same.

  3. Trusts

Unlike Wills which come into effect after death of a person, Trusts provide a way for transferring one’s assets during one’s lifetime.

Trust deed needs to be executed where the beneficiaries of the Trust, the names of the Trustees and the manner in which the Property under trust is to be utilized are clearly listed.

E.g. you may transfer your property in favour of a Trust and create an income stream in favour of

  1. A minor child

  2. Elderly Person

  3. Physically or mentally challenged Person

To summarise,

  1. The point which I want to stress on is to urge you to take cognizance of the hardships a survivor undergoes in absence of a carefully chalked out Estate Plan.

  2. In our course of day to day living, we tend to put tedious and seemingly non-urgent things like Estate planning on the back burner. We feel that Execution of Wills, Trusts, Nomination checking etc are to be done by Elderly, retired people.

  3. However, calamity always strikes unannounced. Hence any individual having assets, liabilities and loved ones has to have an Estate Plan in place.

To make the matters smooth and hassle free, legal help should be taken as any flaw in the documentation can render the plan worthless!

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