Secret 4 of Squirrel’s Corner – guidelines to make your investment life easier, more rewarding and a bit more fun.
This month’s mantra is Legacy.
This is a simple one but we’re constantly amazed by the number of people who are in denial about the basic fact of life – it ends and we go. And we have a responsibility to those we leave behind to ensure that the transition is as easy it can be for them.
The emotional part can never be easy, but we should try and make the practical part as painless as possible.
The most important to-do to ensure this is: Make a Will.
A will is a document that records what you want done with your assets when you decide to leave this existence. It can be as complicated as you like (bad idea!) or as simple as you can make it (please do!). Some easy points to remember about a will:
1. Do be clear and explicit about what and how much you’re leaving to whom.
2. Try not to include confusing conditions and “if this then that” corollaries – it opens the door to avoidable disputes.
3. Make the ‘whom’ very clear – use full names, identification numbers if possible (e.g., PAN or passport) so there’s no confusion about whom you intended to leave it to.
4. You don’t have to list out every asset in excruciating detail (unless you will derive sadistic / masochistic pleasure from doing so). A statement like “like all my holdings in mutual funds” or “all my fixed deposits with banks and companies” is fine. It saves you the hassle of updating your will every time an investment changes.
5. Do sign it and have it witnessed. If you can get around to registering it, that’s even better, but it is a bit of a logistical challenge since you and your witnesses will have to traipse around to the registrar’s office in person for this. Also, if you do make changes you’ll have to register again.
6. Keep it updated. Take a look at it at least once a year and see if you’ve changed your mind about anything or if some of the people you’ve named have fallen out of favour with you (or fallen off a cliff).
7. When you update, you can either draw up a fresh will (freshly signed and witnessed) or you can add a codicil, which is a fancy word for an additional page (or pages) making some changes to your will. But do remember to sign the codicil and have it witnessed just as if it were a fresh will.
8. Keep the will in a safe place that is accessible and make sure your family and your executors (whom we’ll come to in a bit) know that it exists and know where to find it.
9. And by the way, the will doesn’t have to be on stamp paper. It can be on plain paper. It can be handwritten or typed. If it’s on multiple pages (most likely), do sign each page.
Probably the most important aspect about making a will is Choose Your Executors Wisely. The executors are those who will carry out your wishes as embodied in your will. Make sure they are trustworthy, reliable and likely to outlive you. Name alternative executors just in case something happens to your first choices (life is unreliable and strange). It’s perfectly ok if your executors are also beneficiaries under your will.
If you anticipate trouble from disgruntled relatives who are expecting a handout when you die, take the trouble to explicitly include or exclude them from your will as you see fit.
But all of this will be pointless and a right royal headache for your executors unless you Keep Proper and Complete Records of your investments. Please do refer to our earlier article on how to Manage. If you’re tech-savvy enough to be using online access and email and similar stuff, it’s a good idea to have your latest passwords somewhere accessible to your executors (but not too accessible to the world at large).