There are many households (including mine) where the other partner knows nothing about investing, paying bills, taxes, etc and is not interested in learning. How can we set up instructions so they can manage our money in case we become too busy with work (or go abroad) or, worse, die?
Instruction Sheet: Considerations
- It should be available online and offline. Nobody cares where you do it – on Evernote or Google Sheets or a 40-page notebook. You can type it on a Notepad and print it. What matters is accessibility and easy instructions.
- There is no template to fill in either! Your life cannot fit into my template and vice versa. Let us create our own using common sense.
- Today, your partner may act disinterested and irritated if you discuss this with them, but they will locate it if/when the time comes. So, there is no point in fretting.
- The inactive partner should have primary access to the document at all times.
- There should be no need to update it regularly unless there is a major change.
- A trusted SEBI registered fee-only financial advisor should be mentioned in the document as the “go-to” person for all clarifications. A friend from the office can help with getting settlements from there. Many of my father’s friends continued to help my mother years after he died to pay commission arrears, etc.
- Ideally, it would be best to engage a fee-only advisor and force your partner to sit with you for a session (after the plan is created). Bribe your partner if necessary! This is crucial because they will have at least a partial memory of how your finances are being managed.
- A continuity kit is not a will. A will is part of the continuity kit.
- The partner should be made a “second holder” in all accounts where possible and not as a nominee. Since the second holder will have proper KYC credentials, the transmission will be much easier than the nomination.
- If you wish to apportion assets among family, they can be made second holders in different accounts depending on your comfort. Doing this is the equivalent of an “open will.”
Instruction Sheet: Contents
Listed in approximate order of need.
- Location of emergency cash stash at home
- Location of health insurance documents and cards. In the case of group insurance, provide the contact details of office personnel.
- List of bank accounts and location of bank passbook and debit cards
- Renewal dates of insurance policies, Tax payment dates (advance tax, water and sewage tax, property tax, etc), and any other regular payments.
- Contact details of SEBI Registered fee-only advisor and trusted friend whose investing compass is aligned with yours. Otherwise, some old uncle will offer unsolicited “guidance” and upset the apple cart.
- A list of credit cards is held with links to find out the balance to be paid.
- List of other EMIs to pay. Insured loans like home loans are not an issue upon death, but the bank has to be notified. If you have some stash of cash that can be used to clear off a loan, indicate that.
- Location of PAN card, Aadhaar card, License and other forms of ID.
- Location of important documents like EB card, Water tax, property tax, and pension documents with information on when and how to pay.
- Term Insurance and other life insurance documents with instructions on the claim (forms are available on insurer sites). For group insurance, provide the contact details of office personnel.
- List of monthly/periodic payments to be made with websites: Internet bill, Telephone bill, EB bill, Water tax, Property Tax, health insurance premium, school fees, etc.
- Information on how to apply for a death certificate.
- List of offices to be immediately intimated upon death: Bank Pension branch, Home Loan disbursing office, etc.
- Information on how to apply for a legal heir.
- Use a password manager with a master password that cannot be stored. Ask your partner to set the password and check from time to time if she remembers it. Better still, each time you log in, ask for it.
- The “forgot password” option can always be used, but they must access your email and phone. So use only one email (with the password mentioned in the continuity kit) and ensure they know how to unlock your phone! <= Thanks to my friend Rajkumar for this. When Rajkumar’s father suddenly died, no one knew the passcode for his phone. Thankfully, his young grandson remembered!
- List of all short-term financial goals (< 10 years away) and their associated investments.
- List all long-term financial goals (> 10 years away) and investments associated with each. That session with the fee-only advisor may come in handy here! A major headache is resolved if all investments are already tagged to goals or at least listed and available with the fee-only advisor.
- Link to Cams Karvy Consolidated MF Account to get all mutual fund holdings via registered email (15 is important!). This may or may not retrieve Demat holding as well. So, it is better to include information to get the data from CDSL. Zerodha has a helpful article.
- If you are tracking all investments in a single portal, it’s login details.
- Information regarding other investments: PPF, RDs, FDs, real estate, stock options, etc.
- The advisor or a CA can help if a HUF is in place. Ashal Jauhari from the Facebook group, Asan Ideas for Wealth, can also help with this or any of the above aspects.
- If there is a will, there are instructions for implementing it.
- Some general instructions on the transmission of units or money. Some require just KYC details of the nominee; some require a legal heir (property, pension annuity), etc. Some research and documentation on this will be immensely helpful.
- Details of additional responsibilities or sources of income.
- Also see: Everything I want my family to know about our finances is here.
How do you invest the assets to generate constant or inflation-protected income (depending on the asset value)? How do we plan for the future of children if they are young? How do you handle outstanding debt? These are fairly complex questions for someone without money management experience. Therefore, it is best left to a fee-only advisor. All the more reason why you should engage one today and set up the foundation.
Each person’s circumstance differs, and the instruction list will change accordingly. A set format will not work. Creating this is nothing more than common sense. Please do this immediately!
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