Channel name : MoneyControl

Date of the publication : June 17, 2021

Apple is adding a digital legacy service – allowing you to assign a family member who can have access to your data in the event of your passing away.

This is important because your loved ones get access to your data and so important information will not be lost. Social networks such as Facebook already have tools that let legacy contacts archive their accounts and even Google maintains an inactive account manager that releases control of an account to a designated person after a set period.

Whilst it is important to safeguard and pass on your digital information, have you ever thought about doing the same with your financial information?

Consider two types of people – those that are extremely hands-on with their financial information and those that are extremely hands-off. Often, they are paired with each other. There are many instances where one family member knows all the financial details about investments, insurance policies and such but others in the family have no clue and have delegated all those tasks back to the one member who handles everything. What happens if the one family member who knows everything is suddenly no more?

Passing on the digital legacy

This is why it is very important to be able to pass on all your financial information – your family’s financial legacy – to your loved ones in a manner that is easy for them to understand and manage.

The best place to start is to create a folder to maintain all your financial records. If other members in your family are aware about this folder and where it is kept, it means that they will be able to understand the family’s financial state easily. What do you put in this folder?

-Fixed deposits: When you invest in a fixed deposit, you get a receipt from the bank – put all these receipts from your fixed deposits in this folder.

-Investments in financial securities: NSDL sends monthly statements to your email that give a record of all investments that have been made in instruments such as mutual funds, stocks, and corporate deposits. Taking print-outs and putting these in your folder will give a comprehensive picture of your investments. This document also has the details of holding patterns in your investments, nominations as well as the registered email ID and mobile number. It is important to review if all this information is up to date.

-Insurance policies: Putting in all your insurance policy documents, be they health, life, or any other type of insurance is important because a person can get all the details in one place. Suppose you are in the hospital – knowing where the health insurance policy document is will help save time and stress for your family members

-Other investments: Other investments such as PPF, NPS, EPF and other savings schemes should also be put into the file. You may even consider keeping property documents.

Recording liabilities

Formal loans: If you go to the CIBIL website, you will be able to not only check your credit score, but also get access to your credit report. This report has a summary of all your liabilities outstanding with financial institutions, including credit cards. Which is why this is a great report to put into your financial folder.

-Informal loans: You may have taken a loan from a family member, or you may have given out an informal loan to someone. It could also be that you run a business and have people who either owe you money or who you owe money. Whatever the case, it is important to list down a summary of what these loans are and to whom they relate to. You don’t want your loved ones to be surprised by unexpected claims.

Finally, the folder should contain the contact information of investment advisors, bank relationship managers, chartered accountants, agents, brokers, and others who may have helped to facilitate such policies and investments.

It is important to regularly review this file and update all the documents periodically.