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Radhika Gupta, CEO of Edelweiss Asset Management, recently took to X (Twitter) to underscore the often-overlooked aspect of financial planning—preparing for the transmission of assets in the event of death. In her detailed post, Gupta highlighted the importance of proper documentation and planning to avoid unnecessary complications for loved ones.
“What’s the part of money that we least discuss, but really need to? The part that can make life very difficult if the simple things are not done. Transmission in the event of death,” Gupta wrote. She shared her insights from a recent personal experience, stressing how vital it is to address these issues proactively.
Key Points Highlighted by Gupta
1. Organise Banking Information
Gupta pointed out the complexities of modern banking, which involves multiple accounts and customer IDs. “Make sure that you keep all your information documented and share it with the family. It will be a wild goose chase otherwise,” she advised.
2. Consolidate Financial Life
She recommended maintaining a comprehensive file of all financial assets and liabilities, including bank accounts, credit cards, loans, policies, properties, and investments. “Many times, people don’t even know the number of credit cards they have or policies they have taken,” she noted.
3. Create a Will and Update Nominees
Gupta emphasised the necessity of creating a will to facilitate easier asset transmission. “Check the easy boxes and have nominees everywhere, including real estate. Make sure those nominees are updated at the right intervals,” she urged.
4. Track Income and Expenses
Accurate tracking of income and expenses is crucial, Gupta mentioned, adding that it’s essential for the family to understand household cash flow needs for future planning.
5. Reduce Excess Accounts and Investments
Gupta advocated for simplifying life by minimising the number of bank accounts, investments, properties, and loans. “Every extra bank account, investment, small property, little loan… is an extra headache for someone else to track and manage,” she said.
6. Maintain Liquidity
Emphasising the importance of liquidity, she said, “It’s heartbreaking to see people have savings and investments and not be able to access them because they can’t be sold or they have huge exit barriers.”
7. Avoid Unregulated and Undocumented Investments
Gupta advised against unregulated and undocumented investments, including loans without proper paperwork. “These will be the biggest nightmare in an already difficult time,” she warned.
8. Involve the Spouse
Gupta encouraged involving spouses in financial matters, even if they are initially uncomfortable. “Involve them in reviews, sit down once a quarter and share financial updates,” she suggested.
9. Educate Children on Finances
She recommended introducing children to financial management early. “Our children are more capable than we think. It takes time to get comfortable with money, so the sooner they start, the better,” she said.
10 Consider a Financial Advisor
Highlighting the value of professional guidance, Gupta said, “In all times but especially these times, a good financial advisor is invaluable… in guiding the family through all the documentation and then retooling the portfolio for new circumstances.”
Gupta concluded her post by acknowledging the complexity of financial terms and processes, pledging to simplify them within her capacity at Edelweiss. “Money conversations are often avoided in our homes because they are difficult. They shouldn’t be, because not sharing information or avoiding conversations will lead to more chaos,” she posted.
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Published: 27 May 2024, 09:37 AM IST
