Robert T Kiyosaki rightly stated that “in the long run, it’s not how much you make, it’s how much you keep, and how many generations you keep it.” Quoting a recent study, an exorbitant amount of more than Rs 24,000 crore is lying unclaimed with the banks as per a report published by the RBI titled “Unclaimed Deposits with Commercial Banks including Regional Rural Banks” from the period of December 2005 to December 2020.
The same scenario can be witnessed in other financial institutions such as life insurance offices, provident fund offices, post offices, etc., where investors, both big and small, like to park their money.
This is the hard-earned money of individuals which after their demise turns into a dormant account with banks and financial institutions.
Reasons for high unclaimed funds?
The major reason is that the family members are completely unaware of the existence of the investments/funds of the deceased. Another reason is the failure of the account holder to appoint a nominee.
In the absence of a Will or nomination, the financial institutions must follow the procedure of law to hand over the assets only to the eligible legal heir of the deceased which is a cumbersome process.
The solution to the issue
The solution to this is to make your family members aware of your investments by preparing proper documentation for them to avoid such unforeseen circumstances. “Will” is such a document that serves the dual purpose of making your family aware of your investments and guaranteeing them access to the respective assets and it also designs the family members who will have the right to inherit a person’s assets and in what proportion.
A Will has to be drafted with precaution and with attention to detail.
It is advisable to mention all single/joint properties, as well as all liabilities/loans in the Will, including movable and intangible properties which will include, details of bank deposits, bank account numbers, insurance policy details, and investment in mutual funds, etc.
You could also mention the location of your physical file and if the details are saved on a computer, then do provide the details for accessing the same (this could be done through a separate document which may contain a password, etc.
Avoid mentioning such details under a Will because it becomes a public document). One can mention the contact details of your wealth manager, or chartered accountant so that your family members can contact them.
It is important to mention an Executor under the Will who would be responsible to submit 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.
A Will not only fulfill your wishes with respect to the distribution of assets after your demise but can also avoid the potential dispute among the family members with respect to their share.
All these benefits in a single document can help you in passing on your wealth to the next generation, and avoid future litigation and confusion for your near and dear ones.
(The writer is the associate vice president of succession planning at Emkay Wealth Management)