Lessons I learnt from inheritance

I and my mother inherited some money on the sudden demise of my father at the age of 47 in the year 2005. My father was survived by a wife, Two daughters, 21 and 16. Our Family was shattered and in deep pain. We had no direction to go, It seemed like all the doors were shut for us.

When we came back to our senses, we realized there is our life that has to be taken care of. Of course , my father was a well managed and well organized man when it came to Finances.

He had well documented all his insurance policies, Investment proofs, Bank account statements, Bank FDs, Shares statements, All property papers. He had all nominees/ beneficiaries intact

Inheriting money is common but not easy to manage. For most of the people inheriting money, it is first time that they are dealing with money independently.

As per research and survey conducted , it has been observed that women tend to outlive men. They mostly never participate in money decisions , so they find it difficult to handle the money on their own for the very first time and inheritance is usually a large amount as this is the amount derived from insurance policies which run in lakhs or property proceeds which can even run in crores. However big or small the amount of inheritance is, the idea is it should be managed in such a way that should be well versed with our future goals and money requirements.

I am sharing my lessons from Inheritance , hoping that helps people who are inheriting money and people who are in the process of building legacy can make their own list of Do;’s and dont’s:

1. Inheritance comes with a LOSS : Yes, Loss of losing a loved one, someone close to you who you are never going to see in this lifetime. Firstly, it is important to deal with emotions for some time as any wrong decision or move can prove fatal in the times to come. Give yourself some time, adapt yourself to the new changes. They say “Time heals everything” Rather I would say “Time helps you to live your life without that person in it” You learn to lead your life without your loved one. Let the money inherited stay idle in bank account or liquid funds and After you are settled and balanced enough to make right calls, start with investing process.

2. Listen to everyone, but do what you consider is RIGHT : I and my mother followed the principle of “ Suno Sabki, Karo Apne mann ki” There will be all kinds of people – uncle, aunts, elders of the family who want you to make certain choices which according to them is right as that is the way they see the world. There will be all sorts of suggestions, advices flowing in, some will be out of concern – genuinely they want to help you and some will be they could see you as an amateur who doesn’t know how to handle things on your own. That unsolicited advice is not required although It is good to seek help from those you know you can trust.

We followed the principle of “ Listen to everyone, but do what you consider is RIGHT “. Do what gives you happiness and contentment.

3. Well Document the files: If you are in the process of building a legacy, you should well maintain a file which has all important documents – Insurance policies, Fixed deposits, investment proofs , property papers and likewise. That file should have contact persons’ name and numbers who can be called upon in case of transmission process.

My father had one such file which had all the above and also in the first leaf was summary of all his assets at one page with clearly mentioned who is beneficiary of which asset and who to contact in case of an emergency which helped us in claiming the amount smoothly without any hassles.

It is very important to share with your loved ones about the investments and insurance that have been done as most of the times families of the deceased don’t even know if any such document or asset exists due to which the hard earned money of our lifetime remains unclaimed.

4. Prioritize your goals and then invest: It is extremely important to list down the goals before starting with the investment process.

This is how we did:

Sister’s marriage – 35 lacs

Mother’s immediate regular income – 1 lac per month

Emergency fund for mother – 5 lacs

Retirement corpus for her – 1 crore at 60 years of age

Building Mother’s legacy further

This helped us in earmarking the amount against the goals listed and invest in right products.

Also, primary beneficiary should keep all assets under his / her control. It is often said- “ Money changes people” seeing large amount of money at young age can actually influence the behavior and things can take a wrong turn. It should be passed on to secondary beneficiary slowly and steadily .

5. Due diligence: Due diligence should be done at all levels, even if you are an aware investor, educated investor or experienced investor. We were naive and were cheated initially by a banker who actually parked in a big part of the money for sister’s marriage which was due in 4-5 years in 10 years long insurance policy after explaining benefits of a five year FD. I had started carrying forward papa’s business and was undergoing training which taught us to do our own due diligence . I came home and checked the product and complained and got rid of wrong product being sold to us.

There are so many people out there who fall prey to such instances day in- day out. It is our responsibility to take this decisions carefully after doing all due diligence on our own.

6. Write a WILL : Losing a loved one reflects upon you to build your own legacy. You will keep in mind the do’s and dont’s from your own experience. My father used to say very frequently – “ It is only immediate family members- parents, siblings, spouse and kids who actually grieve the loss of a loved one” .

It is extremely significant that your assets are divided in a way you want them to be , hence will is important.

And, No one is too young to make a will. I and my husband made a will 5 years ago when we were 35 and 30.

About the author: Gurleen Kaur Tikku is a Financial Consultant and devotes her time to her company www.hareepatti.com. She has done her Bachelors in Finance and Investment Analysis(BFIA) from College of Business Studies(CBS, Delhi) and PGDBM from IMT, Ghaziabad.. She can be Contacted at [email protected]