I put before you, two real-life examples that may whet your appetite for further reading of this gloomy topic.
Chartered accountant Shilpa* married IT guy Suraj from the city of Bangalore. In terms of earning potential and tech savvy, both were at the forefront of their generation. Like thousands of DINK (‘double-income-no-kids’) couples in the city, they owned apartments, a car, bike – all bought on loans – and many bank accounts. He was the quintessential techie who locked everything, every account under impossible alphanumeric passwords with special characters while she was the quiet, abiding spouse who let him manage all their money matters because it was ‘convenient’ that way. Being a chartered accountant, Shilpa was extremely organised when it came to work, a virtue she didn’t need to practice at home thanks to Suraj. They lived the life most of us nouveau rich couples of 21st century India are fortunate to enjoy. Why worry? After all, bad things happen to other people, right?
Then one day, he died in a bike accident.
Shilpa’s world came crashing down like a deck of cards. She had absolutely no idea how many accounts they held in which banks, how bills were paid each month, what the mortgage on the house was and how it was paid, where their investments lay or how to access them. Nothing. Just a big zero. His accounts didn’t have a nominee. His life insurance policy taken many years ago had his mother who had expired two years ago as the nominee. In her own words “I couldn’t even grieve in peace”. The creditors were at the door in a few days. A crushed laptop and mobile phone held secrets nobody could access. A fairy tale life built on the foundation of ‘double income’ was left in ruins before the embers cooled on Suraj’s pyre.
Amita was born into a poor family from a remote village in Maharashtra. Like many children from under-privileged families, she had to drop out of school at an early age and take up domestic work as a live-in maid servant in Mumbai to sustain herself. Her employers Sameer and Supriya were kind and looked after her every need from a young age, even getting her married at the age of 19 to Anil, a 21-year old ‘decent fellow’ with no vices who had a ‘job’ in Pune. Anil was educated till Class X, and could read and write Marathi and English. He was an ‘agent’ providing services for the Maharashtra Shops and Establishments Act. You want to open a shop or business? Anil would get your entire documentation done for a fee. He understood tedious government processes and paper work like the back of his hand. He also knew how people stand to lose everything if their paperwork wasn’t in order. Put simply, both of them were from the lowermost strata of society. They were married for ten years.
Then one day, he suffered a massive cardiac arrest and died at the age of 31.
The contrast in Shilpa and Amita’s life situation couldn’t have been starker. Every single asset and financial instrument in Anil’s case was either co-owned by Amita or had her as the nominee. He left her with two apartments, one ‘chawl’ (tenement), a four-wheeler and a bike – all secured with loans that were insured so she didn’t have to pay a dime after his demise. He had taken out multiple term insurance policies in his name that covered his wife, mother and son’s needs for the future. A day after his demise, grieving Amita handed over a neat file to Sameer and Supriya with all the documentation that Anil had left in her custody. Within 15 days, over 40 lacs flowed into her savings account, she obtained indemnity from all their loans and inherited all their property without a single glitch. The ‘documentation man’ had left on his final journey like he was preparing for it every day he lived. What’s more, he had quietly inducted Amita’s uneducated brother also into the business, thereby ensuring his financial freedom long after he was gone. Amita now lives with her son in her own 2-BHK apartment in a middle-class neighbourhood in Pune with complete financial security.
How Prepared are We?
Somewhere between these two extreme ends of the financial acuity spectrum, you can locate the narrative of your life. In most families I know, financial matters are completely outsourced to the man in the house even though the wife is highly educated or well placed. Netbanking, taxation & wealth management is anathema to wives who are smartphone and internet enabled. The description of ‘well educated but financially illiterate’ would fit most of us like a glove. How many of us are financially equipped to handle the sudden demise of a breadwinner? Or the extended medical invalidation of an earning member? Does your wife even know the customer ID or password to her own account? Your grin says it all.
To be fair, this is not just an Indian thing. Chanel Reynold’s husband was hit while riding his bicycle near Lake Washington, Seattle needing expensive treatment that ultimately couldn’t save his life. It was the same old story. A four-bedroom house bought on mortgage, meagre emergency funds and a number of accounts locked with passwords that went with her husband to the netherworld. They even had a will prepared but it was not signed, which made it as good as a plain sheet of paper. She spent many months excavating the financial mess she inherited. As a tribute to her husband and with the aim to help others who may end up in the same situation, she started a website, rather irreverently named www.getyourshittogether.com. It offers many solutions to prepare for that phone call nobody wants. It may carry an American flavour but the basics remain the same. It has checklists, templates for wills and living wills, legal forms and estate plans.
I recommend a casual visit to this website to shake yourself out of the illusion of immortality.
Meanwhile, get your act together by sitting with your spouse and working out answers to some of the issues below:
Firstly, shake off that patriarchal mentality that finance is the sole purview of the male head of the family. Welcome to the 21st Century. Women can read maps and do numbers. Look around. They head some of India’s top banks. Christine Lagarde has been heading the World Bank for over seven years. Dispel the notion that the male member is the sole repository of fiscal jurisprudence. Sit down today and have a chat with each other. Pass the baton around. It’s anyway much safer in the woman’s hand. Remember how ‘tijori ki chaabi’ was always tucked under the waist of the haveli’s malkhin in olden times? What changed?
Make a Will
Kaushal Dalal, the founder of www.indianwillmaker.com says that in India, apart from buying a life insurance policy, not enough thought goes into planning for death. As per him, this could be part cultural, part superstition as we believe that speaking or planning for something means it will happen (kaali zubaan). But whether you like it or not, death will come to everyone. One of the most important parts of planning for the final journey is making a Will. The courts are awash with property disputes. This happens when you die intestate, i.e. without a Will, when the wealth can find many claimants as per the laws of succession applicable to the deceased’s religion.
Many of us live under the false notion that a Will is a complicated and tedious instrument applicable only to the affluent. You can write your Will on any sheet of paper, sign it and obtain the signatures of two witnesses. It’s as simple as that. Registering a Will makes it more resilient to challenge but it is not mandatory. Apart from distributing the wealth as per your wishes, a Will can also lay down responsibilities to look after your dependents.
What’s stopping you from making a Will today?? If you are an Indian, you can visit www.indianwillmaker.com and see for yourself how simple it is (Please follow country/religion-specific laws and directions).
A Living Will
Just as a Will outlines what you want done after your demise, a Living Will specifies your wishes for medical care should you meet with an accident or illness that leaves you incapacitated and unable to express informed consent. It is also known as an ‘advance health care directive’. It covers a number of conditions ranging from resuscitation guidelines to how long you would like to be kept on a ventilator or under dialysis. The concept of Living Will and euthanasia are connected. In India, active euthanasia is not allowed while passive euthanasia is permitted as a legitimate option to withdraw life support when the patient reaches a permanent vegetative state. But unlike more developed countries, India has to deal with complex religious, cultural and legal systems. The Supreme Court is still to decide on the bounds of a Living Will and one hopes that the law will account for families who may be driven to financial ruin in keeping a family member alive when only a miracle can bring them back. Please consult a legal source for advice on writing your Living Will.
Do you really need so many bank accounts? I have savings accounts in four banks and every time I change a log-in or transaction password, I get a headache. When its time to file your tax returns, multiple accounts mean that much more work. In most households, the spouse has another set of bank accounts. Some are linked to housing loans, some to vehicle loans, and some to pay insurance premiums and monthly bills. It can get too intimidating. Not surprisingly, most of us just leave it to one of the members – usually the male – to juggle around with half a dozen accounts. Imagine the state if you were to suddenly attain ‘dear departed’ status. Who will unravel the mystery for those left behind (like Shilpa’s case)? Here are some tips:
- See which accounts you really need and which ones can be closed down.
- Make all your accounts ‘joint’ or ‘Either-Or’ with full access to your spouse.
- Have your spouse as the ‘nominee’ for all your accounts or those that are not joint.
- Familiarise the netbanking-shy member with the process. It is not rocket science.
- Since most transactions are protected through OTP delivered to registered mobile, each one can have exclusive access to the same account with a different customer ID and password.
- If you are the breadwinner, have all your account details readily available with the spouse. Update changes, if any, without fail. Run a quarterly check together if required.
Insure Your Loans
If Anil had not insured his loans and indemnified Amita, she would have lost all their property to the banks and even parted with their savings (Refer Case 2). In short, Anil’s demise would have practically left her on the road. For a few rupees more, consider insuring your loans, especially if you are the sole breadwinner. Nobody has taken the elixir of immortality. When you go, don’t leave those dependent on you under a mountain of debt. I have known people who have gone on a real estate buying frenzy on the strength of current earnings without a care how it will be paid for if the cash flow stops abruptly. Distress sales of property and bank takeovers soon follow.
Equal and Complete Access to Investments
With the digitization of banking and markets, documents and portfolios have been dematerialised and moved online. This brings us back to grappling with User IDs, passwords and the lot. Not everyone’s cup of tea. Again, our good friend in adversity is still that old file with hard copies of all required documents enabling at least a quick overview and access for both stakeholders. Unless you have better ideas, I would recommend full and complete access for the spouse written down in a way that she is comfortable. If you are lucky, very soon she will overtake you in handling the portfolio.
Keep her updated of changes, if any, that you make to the investment plan and route the connected correspondence back to the file. If you are a happy family, both of you will have access to each other’s email as most of the soft copies are rendered through mail. Don’t lock her out of your email or investments. When you go, your entire mailbox will meander without ownership in cyberspace while she battles bankers and insurance agencies.
In some homes, company secretaries manage the breadwinner’s accounts and investments while the oblivious better half swipes plastic from a secondary account. To each his own. But remember, your spouse will be at the secretary’s mercy at a sad and critical juncture in life. I have seen wives and their in-laws fighting over insurance money within days of the funeral. You may have a happy family, but perhaps it is better to get on the same page. Share with those who are dependent on you for their future and exclude secretaries and third parties. This is a personal choice. Decide what works for you.
Do you have an emergency fund lined up for that day when there is a sudden crisis in the family? It could be a job loss, a family member taking seriously ill, emergency travel or any unforeseen situation requiring a large payout. An emergency fund is not for planned expenses but acts as a safety net while your primary investments are safely compounding. How much that fund should hold depends on your money situation, liquidity and medical / disability cover etc. The thumb rule as per experts is 3-6 months household expenses. More importantly, it should be quickly accessible to both of you independently at any time of the night or day.
Plan Your Own Funeral
This may sound bizarre but think about it. You couldn’t plan your birth or first birthday but won’t you like to have a say in how you are bid goodbye? Here are some things you may like to consider (with due regard to specific religious beliefs and customs):
- How would you like your funeral and last rites to be conducted?
- If you want a burial, is it a local grave plot or somewhere out of town?
- How much time would you like your mortal remains to wait for family members to arrive?
- Do you wish to donate your organs or offer your remains for medical research?
- Do you have any specific wishes for your memorial service or remembrance?
…and so on. It would be a good idea to consult your spouse and family members before including these in your Will.
The Master File
Having come so far, it is now time to prepare that master file. Let us review what all it needs to contain so that your spouse and Executor of your Will are able to smoothly and expeditiously transition the ownership of assets and discharge your Will. If I missed out something, give me a shout and I shall add it to the list. Here goes:
- Details of all bank accounts with access codes, fund inflow details, nominee and associated card details.
- Insurance policies with details of sum assured, premium paid, maturity amount, maturity date etc and where the original documents are held.
- Any other insurance cover such as company insurance, loss of licence policies, Postal Life Insurance, ULIPs, ECHS, INBA etc
- Details of fixed deposits, recurring deposits, PPF, EPF, NSCs, Post Office deposits, Indira Vikas Patra etc with amounts, RoI, date of maturity and nomination.
- Details of wealth management account, if any, with portfolio, access codes, nominee and contact details of Relationship Manager.
- Tax returns for the last 3 years.
- Any other investments through Demat accounts, share certificates, debentures or company deposits.
- Details of ECS / Autopay linked to different bank accounts and for what purpose (loan EMIs, bills, policies etc).
- Details of movable and immovable property down to the last detail.
- Copy of the Last Will and Testament.
- Copy of Nomination Forms
- Power of Attorney, if any.
- Contact details of lawyer or Executor of your Will
- Xerox copies of your credit cards,debit cards, PAN cards, Passport, Adhaar and company ID.
Benjamin Franklin said “In this world, nothing can be said to be certain, except death and taxes”.
With PM Modi and FM Jaitley casting the tax net far and wide, you will likely be spending much time on taxes. Don’t lose sight of the other event. Loss of a family member brings immense grief. It is not the time for those dependent on you to be excavating your financial skeletons. Give them the privacy and financial freedom to grieve in peace and move on in life without waiting outside banks and courts.
Leave a legacy, not a mess. Make your file today.
©KP Sanjeev Kumar, 2018. All rights reserved. I can be reached at firstname.lastname@example.org. Views are personal.
All names have been changed to protect identity. Kindly consult a legal functionary for drafting your Will and Estate Plan.