Securing Your Financial Plans

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Securing Your Financial Plans
Sandip Mukherji - 15 July 2019

It was a balmy winter’s afternoon and we were sitting on the lawn of my client at his farmhouse in south Delhi. My client was a prosperous factory owner and had two grown up sons helping him in the business. All three of them lived in the same house along with their families and I have never seen a better bonhomie between brothers and respect for their parents. Picture of an ideal joint family. I casually mentioned writing a will to my client. The possibility of any dispute arising in the family seemed remote then. Even I found it futile to advise him to make a will. He however did not heed my advice. Unfortunately within few months my client expired and in another few months the brother’s bereft of their father’s guidance turned into bitter foes. They went to the court against each other and the rest is history. I want to emphasise here that no matter how blissful family relationships are, it is always better to protect your wealth and financial plans against any disputes and vagaries of life.

Not that a will cannot be contested in the court and is the final word in estate and succession planning, but courts take cognisance of the will of the drawer and arbitrate keeping it in mind. A will is very simple and inexpensive to make and can be made. It can be made by anyone just by having two witnesses and an executor. It can be typed out in simple language and a copy given to the executor to carry out the person’s wishes if something untoward were to happen to him.

This is one way to ensure that the wealth is distributed as per the drawer’s wishes and not lying useless with some financial institution without a claimant. First and foremost ensure that in all the investments you have, there is a nominee appointed by you also advising your heir to do the same.

Another safety net could be a Term Plan for yourself and your spouse. Discuss with your financial advisor as to how much cover you would need and take the plan for the maximum period possible. Taking a Term Plan is also a smart way to double one’s net worth to be passed on to  the heirs.

Let me explain, as this is an important part of Estate Planning. Now suppose, you have Rs1 crore to be distributed to your heirs. However if you were covered for another Rs1 crore, then you would have Rs2 crore to distribute after your demise. Unfortunately in our country we do not have the culture of writing a will and it is borne out by the huge unclaimed amounts lying in various financial institutions, which is of no benefit to anyone.

For example, the Insurance companies have unclaimed amounts of Rs15,166 crore, the Banks have  Rs11,302 crore (these figures are as of March 2017) of unclaimed amounts and Mutual Fund companies have Rs800 crore of investors who are untraceable. Well, the reasons could be many but one of the main reason is the death of the investor and the descendants are unable to claim the money in the absence of a will, nomination, knowledge of the investment and a proper succession. The list could go on.

It is always better to make Estate and Succession Planning a part of your financial planning and to have a candid discussion with your advisor and get professional help to design your succession plan. “A stitch in time saves nine” is an age old saying probably will come handy in such an endeavor.

Many people I have talked to have this attitude which is “oh I will not be there so what do I care what happens when I am not around.” I seriously get very disturbed by this thought as the people we are talking about are our loved ones and we are actually investing so that their dreams are fulfilled. Hence please ensure that your financial plans outlive you and you have taken care they do so.

Happy Investing!


The author is a wealth advisor and Founder,  Tangerine Ideas

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