Financial Planning
How to manage finances when the breadwinner suddenly passes away
If one loves his family and wishes to ensure that his kith and kin will have easy access to his hard-earned savings, it is advisable to take steps to assist and provide for the loved ones, when one is not around to help them
 
Instances are not rare where the bread winner suddenly passes away, leaving the family not only in grief, but also in a financial mess, causing considerable hardships to the surviving family members. Recently in the last week of March 2013, a retired senior citizen passed away suddenly. To put together his various investments, his wife would have to go through many hurdles like complying with various requirements of different financial institutions. But thanks to his careful ways of handling his finances during his lifetime, the burden on his wife was much less and she could weather the storm easily, though basic paper work was inevitable.
 
Here is a step-by-step account of how she coped up with her husband’s multiple investments in different banks and institutions with a little help from her relations.
 
Savings and fixed deposit accounts with banks:
 
On going through his various passbooks, it was found that he had bank accounts with four banks and fixed deposits with all of them as he used to make investments with more than one bank to benefit from the higher rates of interest offered by these banks periodically. The biggest blessing showered by him on his wife was that he had meticulously opened all these accounts and deposits in joint names payable to either or survivor. This helped his wife to get all these accounts converted into her single name by simply submitting a letter along with a copy of the death certificate to the bank, requesting to delete the name of the first depositor and continue with all the accounts in her single name without having to close any of these accounts. Though she could as well have added a second name to the same account, she preferred to make a nomination of one of her close relations to these accounts now standing in her single name, as she did not have children of her own. This whole exercise was completed in a single day, and she could access all these accounts on the same day. 
 
The advantage of having the bank accounts in joint names is that they can be easily converted into single accounts and all fixed deposits could be continued under the second name till the original maturity date at the same rate of interest, which incidentally in the instant case happened to be higher than the present rate of interest offered on such deposits. If these long-term deposits were not in joint names, but in a single name with only a nomination in her favour, his wife would have got the money released from the bank without difficultly, but would not have got the benefit of the existing higher rate of interest on these deposits till their maturity.
 
Safe deposit locker with the bank:
 
The couple had a safe deposit locker in the same bank where they had their savings account. As the locker too was held in joint names with operation by any one or survivor, it was easy to convert the same in to single name by simply requesting for deletion of the name of the first account holder and continuation of the same locker facility in the name of the second holder. Since the locker is now held in a single name, separate nomination was made in favour of one of her close relations, whom she wanted to bequeath all her jewellery, for smooth transfer of assets after her. 
 
Investments in shares of listed companies through demat account:
 
The husband had a demat account with Stock Holding Corporation of India (SHCIL), jointly with his wife and all his share investments were pooled in this account. In the case of demat accounts, there is neither a provision to operate the account severally, nor is there a provision to delete the name of the deceased account holder, when one of the account holders dies. Consequently, the only option available to the surviving account holder is to close the original demat account and open a new account and get all the shares held in the old account transferred to the new account. In the instant case, the wife had to open a new account in her single name and the depository participant readily agreed to transfer all the holdings to her new demat account by submitting the notarized certificate of death of the first holder and on complying with all the KYC formalities for opening the new account. The only problem was that it took more than a month to get the entire process completed during which time; she could not operate the demat account either for buying or selling of shares held in the account. 
 
However, the silver lining was that the transfer of the entire share holdings from the old demat account to the new one in the name of his spouse was done without any charges, as SEBI (Securities and Exchange Board of India) has mandated that no charges be levied in all such cases. 
 
Investments in mutual funds: 
 
He had investments in as many as six different mutual funds, but, fortunately, all these investments were also held in joint names. But here again unlike bank accounts, there is no provision to delete the name of the deceased depositor, and all mutual funds insisted that a new account is required to be opened in the name of the wife of the deceased, though she was a joint holder with either or survivor clause. Due to this requirement, she preferred to close all accounts and sought redemption of all mutual funds by submitting a request with a copy of death certificate to each of the mutual funds. It took about two weeks to get the payment, as some funds insisted on complying with the KYC formalities before paying the redemption amount. Since the wife of the deceased had KYC documents ready, it was easy to get these investments redeemed, though some paper work had to be completed. 
 
Filing of income-tax return of the deceased: 
 
Benjamin Franklin said, “In this world nothing can be said to be certain, except death and taxes”.  So even after the death of a person, there is a need to complete the process of paying income tax on the income of the deceased till his death, if he was an assessee for previous years or he had income during the year of death above the threshold limit under the Income tax Act.  As the deceased was a tax payer for the last several years, and had income beyond the exempted limit during last year, his wife as his legal representative has to file the return of income for the year assessment year 2013-14. She completed this process last week by paying the balance tax due and arranging to file the return of income with the help of their tax advisor, a chartered accountant. 
 
This, I understand, is necessary in the interest of closing the income tax file of the deceased, as otherwise, the tax department may issue a notice to the legal heirs and lay a claim for the unpaid tax with penalty from the estate of the deceased, which can be avoided by filing the return on behalf of the deceased after remitting the tax dues.
 
Usefulness of a Will: 
 
The departed senior citizen had a left a will bequeathing all his assets in favour of his wife. But the necessity to use the will did not arise because of the ease with which the assets were transferred to his wife, who was the only legal heir as stated above.
 
What is the moral of the story?
 
The moral of the story is simple. If one loves his family and wishes to ensure that his kith and kin will have easy access to his hard earned savings,  it is advisable to take the following steps, which do not cost anything, but will save considerable time, money and energy for the loved ones, when one is not around to help them. 
 
1. As age advances, it is desirable to consolidate all your bank accounts by closing all those accounts which are not being operated or used by you. Maintain only those accounts which are necessary for your day to day use. 
 
2. It is advisable to have all your bank accounts in joint names with your spouse with either or survivor clause, as it facilitates operation of the account if one the account holders fall sick or unable to operate the account for any reason. If, however, you do not wish to authorize your spouse to operate the account, the account can be made payable to No.1 or survivor, so that the second holder will have access to the account only after the demise of the first account holder.
 
3. If you have any bank account in single name at present, you can add the name of your spouse or any other close relative even now by just requesting the bank to do so without any cost or lengthy formalities. This can be done even in the case of fixed deposits, if you have invested in bank deposits at present. 
 
4. It is desirable to register a nominee for all the bank accounts by giving a letter of nomination, whether the account is held in single name or in joint names to facilitate release of funds to the nominee easily after the demise of the account holder.
 
5. It is necessary that a proper nomination is registered with the bank separately for locker facility, particularly when the locker is held in single name, to have easy access to the locker when the account holder passes away. 
 
6. If you hold shares in physical form, it is advisable to open a demat account and deposit all eligible shares in this account as it helps to transfer the shares easily to the legal heirs of the account holder. Even here, it is necessary to register a nominee for smooth transfer of shares after the demise of the shareholder. 
 
7. If you have investments in mutual funds, please arrange to get a nomination in favour of your spouse or a close relation registered for every mutual fund, if not already done, as it will help in speedy redemption after the death of the investor.
 
8. If you have any other investments like Post Office Savings accounts, Public Provident Fund, fixed deposits with companies, insurance policies, etc please ensure that appropriate nomination is registered with all of them, which can be easily done even now by simply filling up a form and submitting it to them.
 
9. Despite complying with all the above, it is useful to make a will, if one wishes to bequeath his wealth to his different legal heirs in different proportions or to totally different beneficiaries apart from his legal heirs like for charities etc. Once the will is executed, all the nominees already registered will have to abide by the wishes of the testator (a person who has made a will) and the assets of the deceased will have to be distributed accordingly. 
 
Moneylife Foundation periodically conducts seminars on Wills and Nominations and it helps to attend these seminars to understand the importance of making a Will. 
 
 
 
 
Confucius said:  “Life is really simple, but we insist on making it complicated”. Let me add that we make it complicated by our own actions and inactions. So let us act now, before it is too late, to put our finances in order, because, as the saying goes, stitch in time saves nine.
 
The author is a banking analyst and writes for Moneylife under the pen-name of Gurpur.
 

User

COMMENTS

subbu

3 years ago

Mostly we forget that Insurance will be much useful for our families. We expect good returns through insurance for us. But Insurance is mainly for our families during unforeseen circumstances like death or permanent disability.

atul sule

3 years ago

excellent article,simple language,most useful for common man.pl. cover immovable property in next article.

AThiagarajan

3 years ago

Is there no implication from incometax perspective, if the spouse whose name you wish to add is a separate tax assessee?

REPLY

nagesh kini

In Reply to AThiagarajan 3 years ago

none that i'm aware of.

nagesh kini

In Reply to AThiagarajan 3 years ago

none that i'm aware of.

nagesh kini

3 years ago

Yes, what good old Confucius said centuries back is more appropriate even to day.
The sum and substance is
1.Have minimum number of bank accounts,
2. Always on either-or-survivor basis,
3. With nominations registered
4. Make out a simple one page will to avoid complications.

It makes life lot more simpler for the survivors!

Pune RTI activists start filing complaints against political parties for defying CIC order to appoint PIOs
The deadline of 16th July is over and political parties are trying devious means to be out of the RTI ambit. Pune activists though have triggered off action by sending a complaint to the CCIC for non-compliance of its order
 
With the political parties defying the Central Information Commission’s orders to appoint Public Information Officers (PIOs), Appellate Authorities (AAs) and implement voluntary disclosure of information under Section 4 of the RTI Act, by 15th July, RTI activists from Pune have lodged a complaint with the Chief Central Information Commissioner (CCIC) for non-compliance of the Commission’s order.
 
The complaint signed by several RTI activists like  Major General SCN Jatar (retd), Vijay Kumbhar,Vivek Velankar, Jugal Rathi and others including this writer, has requested CCIC Satyananda Mishra to “take necessary action and order them (political parties) to appoint PIOs, Appellate Authorities & disclose details of their working.”
 
The letter which has been sent on 16th July states: “This is to complain regarding non-compliance of your order dt 3 June 2013 that political parties—Congress, BJP, BSP, NCP, CPI and CPM—should appoint PIOs, Appellate Authorities and disclose all the details of their working in six weeks i.e. 15 July 2013. We have visited and thoroughly browsed the respective websites of all the political parties mentioned in your said order. We did not find any action taken in compliance of your order.”
 
Earlier, the CIC had made it clear that it does not have any authority to suo motu direct the political parties to abide by the order. However, in case of complaints by the citizens of non-implementation of the same, the CIC can begin the process once again.
 
The signatories include Vivek Velankar, Jugal Rathi and  V Sahasrabuddhe of Sajag Nagrik Manch,Pune; Maj Gen(Retd) Sudhir Jatar of Nagrik Chetna Manch; Vijay Kumbhar of Surajya Sangharsh Samiti; Dr Shriram Pande, RTI Forum,Pimpri Chinchwad, Vinita Deshmukh of
RTI Forum for Instant Information and Vihar Durve.
 
Delhi-based RTI activist Commodore Lokesh Batra (retd) has brought to the notice of the government, of its own press release issued on 8 July 2008 which states the government will not make any amendments to RTI without consultations with civil society. The press release reads thus: “The government proposes to strengthen right to information by suitably amending the laws to provide for disclosure by government in all non-strategic areas. In this regard, it is proposed to review the number of organizations in the second schedule to the Right to Information Act, 2005, and make rules for more disclosure of information by public authorities. 
 
"Government has received representations expressing doubts about the proposed amendments. Non-governmental organisations and social activists will be consulted on the proposed amendments. However, no time frame can be fixed for completion of the process. This information was given by minister of state in the ministry of personnel, public grievances & pensions, Prithviraj Chavan in a written reply to a question in Lok Sabha."
 
Batra has shot off a letter to president Pranab Mukherjee stating that political parties should seek legal intervention if they do not want to be under RTI Act and not circumvent illegally as it amounts to contempt of assurance given in the Parliament. He states, “Sir, there are media reports that the government is contemplating to counter the decision of the CIC declaring six political parties as public authorities which are subject to the Right to Information Act by amending the RTI Act, 2005. The representatives of all political parties have stated that they believe the CIC decision is unsound legally and hence they are opposing it. If they are being truthful, they can certainly go in a writ to the courts. In the past CIC decisions have been quashed by the courts. In the instant case I cannot see any reason which justifies any amendment to the RTI Act, 2005, by the government and that too without consulting all the stakeholders/citizens at large that include non-governmental organisations and social activists.”
 
Delhi-based RTI activist Subhash Agrawal states that, “if the Union government and political parties are so sure about a full-bench verdict from the Central Information Commission (CIC) for bringing political parties under the RTI Act to be contrary to the law, they should challenge the CIC verdict in the courts rather than adopting short cut route of ordinance or legislation instead of breaking the solemn assurance given by Union government to people of this nation in the Parliament. President of India in his dual capacity as Head of the nation and the Parliament should honour assurance given in this regard by his government in the Parliament in this regard.”
 
Agrawal along with Anil Bahirwal had filed a RTI application to all six major political parties seeking information on funding they received from various sources. Communist Party of India (CPI) was the only party which provided a detailed reply. States Agrawal, “CPI should be complimented for being the first and the only political party for disclosing funding made to it by various sources even though it did not approve of CIC-verdict bringing political parties under ambit of RTI Act.”
Agrawal says it is important that political parties should be under RTI as besides funding, “important aspects of poll-reforms can also be queried from political parties through properly drafted RTI petitions which can practically provide nation and its public purity in poll and political system.”
 
However, with political parties united, when it comes to defending their alleged financial misappropriations, it is unlikely that transparency in this area will come so fast. For, earlier the government had planned to bring in an ordinance to keep political parties out of RTI ambit, before 15th July (the time within which political parties had to appoint PIOs and AAs). However, due to the furore of the civil society, now it has decided to bring the amendment in the form of a bill in the Monsoon session of the Parliament. Guess, even the UPA’s die-hard enemy in the Parliament will not oppose it. Such is the tragedy of our democracy.
 
(Vinita Deshmukh is the consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte and is the author of “The Mighty Fall”.)
 

User

COMMENTS

Jagmohan S

3 years ago

Congrass ki Nihat kharab hai, because unki party mein bauat GAPLAY Hai ....

RTI

3 years ago

RTI Foundation of India
Goa vigilance department demanded to be put beyond the purview of the RTI Act

Read more at: http://www.rtifoundationofindia.com/goa-...#.UfpzldJHJcg
RTI Foundation of India

sonia

3 years ago

To selectively borrow from a message printed on the bills of a Mumbai eatery that fell victim to recent Youth Congress vindictiveness in Mumbai: As per UPA Govt, eating money (2G, Coal, CWG Scam), collecting donations from the public for dubious ‘relief’ funds, putting the interests of ‘top businessmen’ and foreign investors before the people of India, having the latter’s every thought, word and action policed by agencies that have repeatedly been used by the Congress to perpetrate atrocities against innocent citizens (e.g. States of Emergency, ’84 Pogrom etc) for which the guilty have repeatedly got away…All those are considered necessities. But, public scrutiny of UPA party-funding, now THAT is an outrage!
Any political party that refuses to allow public scrutiny of its funding should be barred, by Election Commission of India, from contesting elections.

Jagmohan S

3 years ago

we should start campaign against it...
Jagmohan Gill
Social Activist
Punjab

Sethi

3 years ago

Vinita , the people of India have long memories . Let us see which political party supports the legislation to keep parties out of the ambit of the RTI Act in the monsoon session of Parliament . 2014 is not far away . The politicians will get their answer .

Raja JohnBunch

3 years ago

I had filed 4 RTIs with Political parties. 1 Party reply was due on 10th. No reply ,have filed Complaint with CIC on 11/7/13.
2 complaints due tomm. Will do so.
Rgds
Raja John Bunch
Borivali W
9969972283

sathyacumaran

3 years ago

sathya cumaran i wanted to know what is procedure to get information about non complaicne of duty by sebi nse bse can i approach rti for not taking my case i need your help reply


sathyacumaran
09444021822

Govt relaxes FDI caps on investment in key sectors
In the contentious insurance sector, it was decided to raise the sectoral FDI cap from 26% to 49% under automatic route under which companies investing do not require prior government approval
 
Opening the doors to shore up foreign investments, the government on Tuesday liberalised FDI limits in a dozen sectors, including allowing 100% in telecom and higher limits in “state-of-the-art” defence manufacturing, to boost the sagging economy. 
 
The Foreign Direct Investment (FDI) cap for civil aviation was, however, left unchanged at 49%.
 
While the FDI cap in defence sector remained unchanged at 26%, higher limits of foreign investments in “state-of-the-art” technology manufacturing will be considered by the Cabinet Committee on Security, commerce and industry minister Anand Sharma said. 
 
In the contentious insurance sector, it was decided to raise the sectoral FDI cap from 26% to 49% under automatic route under which companies investing do not require prior government approval. A Bill to raise FDI cap in the sector is pending in the Rajya Sabha.
 
‘Consensus’ on raising FDI limits in some sectors and relaxing the route in others was arrived at a meeting Prime Minister Manmohan Singh took with his key ministers, Sharma said.
 
It was decided to allow 49% FDI in single brand retail under the automatic route and beyond through the Foreign Investment Promotion Board (FIPB).
 
Besides civil aviation, Sharma said, no view was taken on relaxing FDI caps in airports, media, brownfield pharma and multi-brand retail.
 
In case of PSU oil refineries, commodity bourses, power exchanges, stock exchanges and clearing corporations, FDI will be allowed up to 49% under automatic route as against current routing of the investment through FIPB. 
 
The decisions taken were based on recommendations of Mayaram Committee which had suggested relaxing investment caps in about 20 sectors, but the meeting approved only in 12.
 
In basic and cellular services, FDI was raised to 100% from current 74%. Of this, up to 49% will be allowed under automatic route and the remaining through FIPB approval.
 
A similar dispensation would be allowed for asset reconstruction companies and tea plantations.
 
FDI of up to 100% was allowed in courier services under automatic route.
 
Earlier, similar amount of investment was allowed through FIPB route. In credit information firms 74% FDI under automatic route would be allowed.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)