The year 2020 has forced us to embrace the reality of death. This is not the first thing you want to read in an article, but it is a reality you cannot wish away. The pandemic made us realise it’s also a reality that can sneak up on us when we least expect it to.
You can’t plan death, but you can plan how your death affects those you leave behind. Whether you are the primary earning member of your family or the one who manages the household expense or both, you need to have a plan in place, in the event of your untimely death. Managing emotional loss is going to be hard enough, why not make the financial transition smooth?
What it requires is for you to be just a little bit more organized and aware now, so that you can plan how your family will inherit when you are not there. There needn’t be any major structuring, just these basic details that you can tick mark.
1. Draw a will
This is most applicable to the primary earner in the family. The will is a statement or a declaration by the owner of the asset on who will receive it upon their death. You can include all kinds of assets like financial investments, property, gold, even art and artefacts and furniture if you want. The will can be written simply on a plain piece of paper and entrusted with someone trustworthy who will take charge if you are not there.
Along with the asset details, you will have to add your personal details along with age and address and that of the beneficiaries. While legal registration of a will is optional, you do need to have at least two witnesses who will be present when you sign the will. The witnesses are there to ensure that you are in sane mental health at the time of drafting the will. You can entrust the will to someone you trust and notify your family of its existence if you desire so.
Registering a will in the court of law is optional and suggested if you feel that the family may have discord over assets, registering a will avoids legal hassles.
2. Have nominees for financial assets
Even before you get to the will, ensure that you have added names of nominees – could be your spouse, children or parents – in various financial investments and insurance policies. Nominees cannot supersede the provisions of a will, but it helps in establishing a smooth transition for individual assets rather than having to show copies of the will everywhere.
The beneficiary of your life insurance policy should be clearly mentioned so that the proceeds come only to that person and other unintended claimants cannot take advantage.
3. Write down the hidden details
The two points above are mainly for the primary earning member of the family, but if you are the one who manages household expenses rather than earning, even then you need to focus on transition. What are you transitioning? Your knowledge of the household budget, payments to be made to service providers and bank account passwords if you do manage those.
These are important details which will help your spouse continue the household financial affairs in your absence without losing sleep.
Both the earning member and the household manager have a role to play in sorting the financial maze of a household. Take that role seriously and understand the gap you will leave behind in case of your untimely death. Now, take all the financial information you have and put it in a format and in a place where those who survive you can use it to fill in that gap without you.