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When You Lose Someone

     Print Edition: May 2012

The weeks following the death of a loved one are harrowing for the family. It becomes even more so if the person happens to be the family's bread-earner. Handling complex financial matters while coping with emotional stress can be traumatic.

However, some planning can reduce stress and help the family put its life back on track. Considering the difficult situation and the complexity of finances, it will be good to proceed in an organised manner. Here is what you should do.

GET A DEATH CERTIFICATE
Most financial institutions, insurance companies and government agencies will not entertain your requests without this document.

EXECUTE THE WILL
A will ensures smooth transfer of assets. If the deceased has left behind a will, the executor (appointed in the will) needs to provide probate, a document issued by the court authenticating that the will is genuine.

A will ensures smooth transfer of assets. If the person dies without a will, his legal heirs need to get a succession certificate from the court.

In case the person died intestate, that is, without a will, his legal heirs need to get a succession certificate from the court. It is required for handling the finances of the deceased. Consult a lawyer for this.

SORT OUT THE DOCUMENTS
Make a list of all assets and investments and documents related to property, employee provident fund account, insurance, bank accounts, mutual funds, stock holdings, and so on.

Get in touch with each financial institution to get these assets transferred. Therefore, proceeding in an organised manner helps, especially if the portfolio has a number of instruments.

PAY OFF DUES
If there are any pending bills, pay them off at the earliest. Also, liabilities like home and car loans should be cleared.

Make a list of all assets and investments. Proceeding in an organised manner helps, especially if the portfolio has a number of instruments.

ALLOCATE INSURANCE MONEY
The best thing you can do with insurance proceeds is to pay off the liabilities. If the deceased was the main bread-winner of the family, continuing EMIs can be a problem.

If the spouse is not earning, a part of this money should be parked in fixed income instruments that can generate regular income. If some money is still left, allocate it for future needs such as child's education and marriage.

STARTING AFRESH

The event is bound to change your life's priorities and future goals. Therefore, your existing plan has to be revamped. Consult a planner and chart out an appropriate financial plan.

SUMIT VAID
Founder and CEO, Ffreedom Financial Planners


Planning your finances on a micro level

CASE STUDY: Priya Malhotra
Malhotra was shattered when her husband, Punit Malhotra, died in an accident six months ago, leaving behind her and their 12-year-old daughter, Pinky. Though Priya's parents insisted that she move in with them, she refused. Her daughter was in a good school, she had friends and moving to a new place would have complicated the situation. So, she took up a job. A month later, we persuaded Priya for a meeting to discuss her finances. The original plan had to be scrapped and a fresh one created. There was a lot to be done.

MONTHLY INCOME - Rs 35,000

MONTHLY EXPENSE - Rs 48,000

MONTHLY DEFICIT - Rs 13,000*

*DEALING WITH THE SITUATION*

1. ACTION: Insurance claims
We placed a claim on insurance policies, two of them-term life and personal accident. We produced the death certificate, hospital records, police records and other documents. After a quick check by the insurers, the money came, in about 45 days. Another amount, from the employer's group insurance policy, also came.

2. ACTION - Executing the Will
Malhotra had made a will. The executors applied for probate. It was easy to then approach the bank, fund houses and other investment intermediaries and tell them about the development.

3. ACTION - Doing the Paperwork
Along with the will, we had persuaded Punit Malhotra to create a list of all the assets he held with the bank account and other investment details (mutual fund investments, PPF account, EPF, bonds and debentures) in a separate statement. There was a set of documents to submit to each institution. Priya chose to liquidate a few investments and retain some. The process to change the holding was initiated. A consolidated list of all assets, including insurance claim amounts, was made and the financial plan reviewed.

4. ACTION - Assets and Insurance
With a fairly good idea of how much money they now had, and what the long-term plan was, she went about paying off all the loans ' home, car and certain personal borrowings. Paying EMIs would have been an unnecessary strain on finances. We then made some investments for her child's marriage and education from the proceeds.

Priya appointed her husband's brother and her sister as guardians to her child in case something where to happen to her. This was to ensure that the child's future is secure. Though Priya took up a job, her income wasn't sufficient to maintain the desired lifestyle. A certain sum was put in safe investments to give the family a regular source of income.

5. ACTION - Moving On
Priya got some help around at home and for taking care of the child. She is now organised with her finances. She has updated her nominations and will, invests from her income for retirement and has bought life and health insurance. She is pulling along, putting up a brave front.

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