An advisor who understands finance and the emotions of making decisions while dealing with assets in India is critical
Vikas, a 45-year-old software professional, has been staying in the US for nearly two decades. He has twin children; both have grown in the US and will turn 15 soon. They are planning to get to college in in the next two years, probably in another state in the US.
Now, Vikas has been away from India for a while. He holds a US Passport and works as a senior executive in a multinational company; he travels extensively. He has created substantial assets in the US.
He has always wanted to spend more time with his ageing parent – his father – now past 70 (his mother passed away a couple of years ago). However, he has barely managed to make a couple of visits in the last 10 years. Vikas wants his father to stay with his family in the US; however, his father is not comfortable about long stays, and spends 2-3 months in the US, at best.
In India, his father had acquired multiple properties over the years. Now he finds their up-keep increasingly difficult, what with all the maintenance work and follow-ups required with vendors and the tenants. Yet, he doesn’t want to sell the properties, one of them being their ancestral house, where Vikas had spent his entire childhood.
Vikas is aware of the situation and the challenges; however, he thinks little can be done to resolve them, being far away. He was searching for an advisor who understood finance and the emotions of making decisions while dealing with assets in India.
When Vikas met us, our discussion revolved around the following broad areas.
It was evident during the discussion that he was in a dilemma in deciding about how to deal with the properties. If he continued holding them, there were issues in maintaining and managing them, and then dealing with inheritance in the future. Further, the fact that his children were not taking any interest in the properties did not help.
And if he thought of selling; it was weighing heavy on his emotions, with all the memories he had about them.
A deeper discussion with his father and himself on the properties, clearly brought out the fact that the emotions of holding them out-weighed the financial benefits of selling. We gave the option of Property Management Services, agencies that could maintain the rented property and take care of the ancestral property in all aspects. Alongside, we suggested parking the rental income in an investment option, to take care of future expenses related to the property.
In our discussion with Vikas, it was noted that he was less informed about the implications of managing finances and assets, in a cross-border situation. He had been deeply engrossed with his life in the US and had lost touch with the progress in India. Further, the limited interactions he had with the banks in India left him frustrated while managing his finances here.
We got him to explain his objectives in life and drew a plan for managing his assets in India in the long run, within his risk appetite.
We connected him to a financial advisor in the US, who understood cross-border situations of NRIs there and worked under a fiduciary standard, just like the way we do here in India.
Vikas was quick to highlight his concerns with tax matters in India. He had not filed for taxes for quite some time. He had some investments and deposits in India, and had been a joint owner in a few properties, where there were rental incomes.
He was thorough and compliant with all his US assets; however, he was unaware of the tax implications on inheritance, in the event his father passed away.
We got him to consult with a CPA in the US, who had expertise in dealing with such cross-border transactions for NRIs. Alongside, we connected him to a CA in India, who helped clear his tax filing.
We got into a detailed discussion with both Vikas and his father to understand their emotional preference in taking decisions about the assets. During such a discussion, it was disclosed that Vikas’s mother had suffered from cancer, and it was the cause of her death. Also, Vikas’s father stated that he had a hidden desire to make a philanthropic contribution towards cancer cure.
We got them connected with an agency dealing with philanthropic activities and also got him to discuss with a lawyer, to explore areas of trust creation for their assets.
There is an equal weight of emotions in dealing with finances, if not more; hence, be watchful in selecting an advisor who understands both, while possessing expertise in local as well as global investments and tax – or is connected with professionals who do.(The writer is Managing Director and CEO of International Money Matters)You can now invest in mutual funds with moneycontrol. Download moneycontrol transact app. A dedicated app to explore, research and buy mutual funds.