What happens to your loved ones if you die because of Covid?

Covid lessons from the last year:

1. Life is short.
2. Health is paramount.
3. We are NOT immortal.
4. Savings are key. Teach your kids financial planning.
5. Get your affairs in order: Make a Will

Waves, Masks, social distancing, sanitizers, flattening the curve, viral load, lockdowns, WFH etc: whole new lexicon added in 2020.

Death is all around us. Covid has shown us all how vulnerable life is. What is surprising is that even the most educated and financially savvy people do not make a Will. It is a big wonder as everyone passes away and the only legal instrument to take care of loved ones' future is writing a Will.

If we do NOT write a Will, we are effectively ticking the 'I am selfish' button as we will leave a massive mess for the survivors.

Scenario 1: Ramesh is 35 years old and bought a house together with his father. Ramesh has 2 kids and an older brother, Kumar. If Ramesh, passes away without a Will, do his kids get access to the house or does his brother become the sole heir after his parents?

Most people assume that their assets will go to their legal heirs anyway. But this is determined by your religion and not straightforward. For example, if you are Hindu and die intestate (without a Will), your assets will be divided equally among class I heirs. This includes 12 types of relations including sons, daughters, surviving spouse, and mother. The portion of your estate split is not under your control and in many cases, this leads to quarrels among your family (totally avoidable with a simple piece of paper).

You may think that your kids won't fight over the assets. But the real question is, how do they get their hands on the assets - physical and digital. Think about that plot of land in your native village (taluk, mandal, district, survey numbers, and all the boring stuff), numerous bank accounts, FDs, mutual funds, Demat accounts etc. Indian banks have around Rs 1,350 crore in more than 1 lakh dormant accounts, of which 75% are savings accounts, the Reserve Bank of India has said in March 2011.

Growing unclaimed deposits: At the end of 2019, the total unclaimed deposits in banking, as well as the insurance companies, had reached around INR 32,000 crore wherein, the commercial banks had around INR 14, 578 crores (overall increase when compared to the previous years. Let us seel the split for Insurance companies:

• General insurance firms: INR 17, 887 crores
• Life Insurance Corporation (LIC) alone: INR 12, 892 crores, and
• State Bank of India INR 2,156 crores

As of 31 March 2019, close to ?25,000 crores was lying in Depositors Education and Awareness Fund (DEAF), a fund launched by the RBI in 2014 for banks to park such unclaimed money. It was close to ?7,875 crores as of March 2015. Do not add to this corpus. You will be saving your family members a lot of time and money if you leave a roadmap in your Will.

Why make a Will, when I have a nominee for my insurance policies and bank accounts? Well, the nominee is NOT equal to the legal heir. The nominee is usually a caretaker until a legal heir shows up. Legal heirs can ONLY be appointed via Will.

Happy family myths (hum aapke hain kaun style) breaks down when wealth is NOT distributed well. Brothers fighting (hello Mukesh and Anil bhai).

Scenario 2: Shahrukh (aged 60) has 2 kids- Ranvir (responsible) and Ranbir (prodigal). Ranvir takes care of Shahrukh during his last years while Ranbir becomes an NRI and goes MIA for the last 10 years. If Shahrukh dies intestate then guess what, Ranvir and Ranbir may inherit Shahrukh's estate equally.

Shahrukh can write a Will and gift Ranvir 80% and Ranbir 20%. He can include an 'in terrorem' clause, that takes away Ranbir's 20% if he contests for an equal share.

Scenario 3: Working parents with minor kids, please watch out. A Will does not only distribute your assets; it also specifies responsibilities. Who will take care of your children in the absence of you and your spouse? Should they be raised by your sister who is in a financial mess or you want your successful best friend to take care of them? One can write a Will appointing a trusted person as the legal guardian of their children when neither of the parents survives. The guardian can be a caretaker of the assets until the kids reach maturity and hand them over. Do you want to leave this to chance?

Please check out how you can get peace of mind within 25 mins here.