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Five things to keep your family privy to

Five things to keep your family privy to
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First Published: Mon, Apr 25 2011. 09 31 PM IST
Updated: Mon, Apr 25 2011. 09 31 PM IST
After you are no more, you wouldn’t want your spouse or dependants in a desperate situation. If you are thinking you’ve stacked up enough investments and insurance to take care of them, maybe you should think a step further. What if they don’t have the key to your investments? Imagine your spouse trying password after password to get into your bank account, turning every thing inside out to look for the key to the locker or sifting through a whole library of papers to figure out where exactly your investments are.
Banks and financial institutions always advise customers not to disclose confidential information, such as your ATM personal identification number (PIN) or Internet or mobile banking passwords, to even your near and dear ones. And perhaps they are right: such measures minimize the risk of fraud.
However, too much confidentiality entails another risk and a bigger one at that: leaving your family destitute in your absence. This could be disastrous even if there is an emergency. Imagine yourself in a hospital and your family without money for your treatment in the absence of access to your funds. By the time they get access or arrange funds from elsewhere, it may be too late.
While keeping your investments secure is important, what is more important is to maintain a balance so that your dependants are not left in dire straits in your absence. Mint Money zeroed down on five things your spouse or one or more family members should be privy to. It could be anybody whom you feel is trustworthy—your spouse, children or parents.
INVESTMENT PAPERS
If you have spent a lifetime building assets, you would want your family to use it. And to ensure that you need to share your investment and insurance details. A life insurance will have to be claimed and investments recovered by the family and without the necessary documents the process could become long-drawn and difficult.
You also need to identify a secure place where you can keep your documents. Says Anil Rego, chief executive officer, Right Horizons, a Bangalore-based financial advising firm, “The safe place could be a drawer in your house or a bank locker. It could be also some other place which can be accessed by you and your confidant. You should also keep some identity proof such as PAN (permanent account number) card or passport along with these documents.”
TIP: Keep scanned copies of these documents in a separate email account which can be accessed by you and your confidante. This will come handy even if your confidant is unable to find original papers. You can also create an excel sheet, listing your investments and the amount.
KEY OF BANK LOCKER
Lockers are a good place to store your papers, apart from the jewellery and gold you have. But what if your spouse can’t find the keys to it. Banks issue a single key for a locker and, therefore, it is imperative for you to keep it safely. But ensure that the place is known to somebody whom you trust.
Tip: Keep the documents of your locker and its key separately. Even if the key gets misplaced and somebody finds it, in the absence of the name of the documents, chances of fraud will become negligible.
WILL
If you have made a will, ensure that your family members find it when you are not around. While most people inform family members, in cases of huge inheritance and family rifts, some may want to keep it a secret. But you would still need to keep somebody in the loop. You could choose a trustworthy lawyer, a chartered accountant or a friend, who could also play the role of the executor, a person who ensures that the testator’s directions in the will are carried out as per his/her wishes. Make sure that the executor understands your choice. Absence of clarity can lead to legal battles between your family members.
Tip: Will can be kept in a bank locker or can be entrusted with your chosen executor.
DEBT
If you have left traces to your assets and savings, but not your debts, your family would be in for an unpleasant surprise.
“Lending institutions can recover full or part of the outstanding amount of any loan from what your heirs have inherited from you. If the outstanding amount of loan is more than the total assets, including savings, banks can even take control of all the assets and the heir gets nothing,” says Surya Bhatia, certified financial planner and principal consultant, Asset Managers.
Tip: Your heirs need to be informed about your debt. Buy enough insurance to cover big liabilities such as a home loan.
Make sure your family is able to use what you leave behind for them.
PINS AND PASSWORDS
Most financial instruments are now online and need PINs and passwords to be accessed. You need to share these with a confidante.
But that may not be a full-proof solution. Some banks require their customers to change passwords at least once a fortnight. Says Kartik Jhaveri, founder and director, Transcend Consulting (India) Pvt. Ltd, a Mumbai-based financial planning and wealth management firm, “One can’t keep sharing passwords every time they change. One of the options is to create a computer file jointly with spouse or parents and keep updating passwords in the same file. The file should be protected with a password and even the computer should have a password. This would also provide multi layers of security to such confidential information.”
Alternatively, one can keep updated passwords in a separate email account which can be viewed by your close confidant as well.
Tip: Ideally, one should not note down such a password on a piece of paper and try to memorize it.
abhishek.a@livemint.com
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First Published: Mon, Apr 25 2011. 09 31 PM IST