The biggest lesson that the year 2020 has taught us is about how fragile life can be. It has taught us the importance of planning for the financial life of our loved ones after we are gone. So, to put that plan in action, here are seven things you should do before you die.
Prepare an asset and liability register
Sounds uncomfortable? But just for a moment, imagine that tomorrow morning you do not wake up, as you have left this world for a journey to another world. Will your family be able to manage their financial affairs? Do they know about all your bank accounts, your investments, your debts, your receivables, etc? Have you collated all such information at one place and informed your family of the same? If the answer is in the negative, then your family members will also inherit a lot of trouble and hassle while claiming this wealth you have left behind for them. So, if you really want to pass on your estate in a smooth and hassle-free manner, then you should prepare an asset and liability register of your estate without any delay.
Complete the paperwork
According to former U.S. President Dwight D Eisenhower’s principle of time management, activities falling under “Important but not urgent” are the trickiest ones to deal with. Completing the paperwork of your investments or properties certainly falls in this category. Missing or incomplete documents could lead to delay and perhaps avoidable legal costs and, at times, even loss of the asset. Hence, it is highly advisable to conduct a once-a-year self-audit of your estate and retrieve all the missing documents in a time-bound manner.
Have joint account holders and nominations for banks
Many times, the immediate challenge faced by the survivors of the deceased is the liquidity necessary to meet day-to-day expenses. The execution of the estate could be a lengthy process at times. More so, if a court order is required to execute the estate, which may take up to a year. Having joint account holders and nominations provides the much-required liquidity, as banks would provide access to funds in the case of joint account holder or the nominee.
Also read: Despite having nominees, death claims can be delayed by banks
Consolidate your estate
Sometimes, for the sake of diversification or just out of certain obligation, we end up owning multiple investment and bank accounts. In the process, we leave behind a messy and scattered estate. Apart from operational inconvenience, such estates are also exposed to the risk of financial frauds, as our sensitive data gets shared with various institutions and authorities. Hence, a conscious estate consolidation by liquidating and closing certain non-essential investments and inactive accounts is highly advisable.
Plan for Inheritance
As they say, the only thing certain in this world is death (yes taxes also, provided you are earning enough). Since death is the only certainty, it is only prudent to plan for a dispute and hassle-free transmission of our wealth to your loved ones after you are gone. Figure out if you would like to gift away some of your assets during your life or pass it on through a Will. In case you foresee a dispute between your legatees, then creating a private trust could be a good idea. Whatever is the tool, what is important is to take action and implement them.
Closure of Legal and Family Disputes
As per findings by Daksh, an NGO which analyses the performance of the judiciary, about 76 percent of all civil court cases in India are related to family and property matters. Most of the time, these disputes go on for years and sometimes beyond generations. You have worked so hard, spent your whole life in creating wealth to provide a comfortable life for your loved ones. Would you like your family to inherit a messy legal dispute or a family feud? In the larger interest of our family, at times, it may be a prudent decision to let go and bring closure to such disputes during your life. Give it a thought, the dispute may just not be worth it.
Give back to the society
When you leave this world, memories and your good deeds alone remain. So, make a difference to the lives of a few people before you go. Pick up a cause, make a contribution to it, become a volunteer and give back to the society. Finally, there are many less-fortunate people waiting to live a better life, so sign up for donating your organs and make the most invaluable gift of your lifetime.