Importance of Will and Appointment

Robert T Kiyosaki rightly said that “in the long run, it’s not how much you earn, it’s how much you keep and how many generations you keep it.” Citing a recent study, a whopping amount of more than Rs 24,000 crore is unclaimed from banks according to a report released by the RBI titled “Unclaimed Deposits in Commercial Banks, including Regional Rural Banks” from the December period. 2005 to December 2020.

The same scenario can be observed in other financial institutions such as life insurance funds, provident funds, post offices, etc., where investors, big and small, like to park their money.

This is the hard-earned money of individuals, which after their death turns into a dormant account with banks and financial institutions.

Reasons for high unclaimed funds?

The main reason is that family members are totally unaware of the existence of the deceased’s investments/funds. Another reason is the account holder’s failure to appoint a proxy.

In the absence of a will or appointment, financial institutions must follow the procedure of the law to deliver the assets only to the eligible legal heir of the deceased, which is a cumbersome process.

The solution to the problem

The solution is to let your family members know about your investments by preparing proper documentation for them to avoid such unforeseen circumstances. The “Will” is such a document which serves the dual purpose of making your investments known to your family and ensuring their access to the respective assets and it also designates the family members who will have the right to inherit the assets of your family. a person and in what proportion.

A will should be drafted with care and attention to detail.

It is advisable to mention all sole/joint properties, as well as all debts/loans in the will, including movable and intangible property which will include details of bank deposits, bank account numbers, insurance policy details. insurance and investments in mutual funds, etc.

You can also mention the location of your physical file and if the details are saved on a computer, then provide the details to access it (this can be done via a separate document which may contain a password etc.

Avoid mentioning such details in a will as it becomes a public document). We can mention the contact details of your wealth manager, or your accountant so that the members of your family can contact them.

It is important to mention an executor who would be responsible for submitting the necessary documents to the bank and financial institutions, along with the death certificate, collecting the funds and distributing the assets to the beneficiaries mentioned in the will.

Not only will it carry out your wishes regarding the distribution of property after your death, but can also avoid potential conflicts between family members regarding their share.

All of these benefits in one document can help you pass on your wealth to the next generation and avoid future litigation and confusion for your loved ones.

(The author is the Associate Vice President of Succession Planning at Emkay Wealth Management)

Comments are closed.