It’s not easy to move on after losing a dear one, but it can be more traumatic for a household that’s lost the breadwinner and doesn’t know where the money is. “Sudden death gives you no time to prepare and, therefore, leaving money conversations to the last minute is a very bad mistake,” said Kalpesh Ashar, founder, Full Circle Financial Planners and Advisors. Ashar narrates an incident about her client who lost her husband in an accident and had a harrowing time because she was not in the loop. “It has taken her nearly three years to consolidate all the investments and accounts of her husband. In fact, she would come to know of investments when she received account statements. She didn’t even know the husband had 4-5 bank accounts,” he said. 

Frightening as it may sound, this doesn’t seem to be an aberration but the norm. “When we meet couples for financial planning a lot of them have no clue about each other’s finances. Although the percentage of spouses unaware is skewed towards women, it’s also the men who have no idea where the wife is investing her money,” said Surya Bhatia, managing partner, Asset Managers. “This is usually because one of them lets the other take charge and doesn’t bother to keep abreast. Among clients we notice that often one of the spouses drops out, so we have to make sure both partners are in the loop directly or indirectly by, say, sharing account statements with both or sharing user names and passwords, wherever applicable, with both,” he said. 

Marriage is team work so is managing household money. Regardless of who earns, the family needs to be in the loop as the cost of not knowing can be huge. According to Priya Sunder, director, PeakAlpha Investment Services Pvt. Ltd, one of her clients bore the brunt of being in the dark. “A client of ours in her 60s lost her husband and for the longest time somehow managed on the pension money until it really began to pinch. In conversations with her she told us the husband had once spoken about mutual fund investments and so we began digging around and realised that the husband had accumulated a neat corpus in mutual fund investments,” said Sunder. 

“Having no idea about your spouse’s finance is counterproductive and it’s as good as not saving any money for your family because they can’t benefit from what they don’t know,” she added. 

Keeping the household informed is as basic as it can get. Shweta Jain, founder and chief executive officer, Investography Pvt. Ltd gave us an account of her client who didn’t have to face any financial hardships when she lost her husband in an accident because she was in the know when it came to money matters. “My client who is also a friend was in her late 30s when she lost her husband. Her husband maintained a file of all his financial documents and she was the nominee in his investments. So for her it was only about the paperwork. The first set of money that came to her was the insurance money and then there was rental income so financially she didn’t suffer,” said Jain. “Insurance is one of the first that’s looked at followed by bank accounts, investments and finally properties. While it may be a traumatic time for the family, a proactive approach helps because it’s difficult to predict the delays though things have improved,” said Jain. 

Informing each other is important but according to the planners that we spoke to, that is only half the regimen to maintaining good financial hygiene in a household, the other half is making sure your family suffers no hardships in retrieving the money. In other words, nominations should be in place and you need to think about making a Will. “Nominating your spouse or legal heir is important and most couples don’t bother to change the nomination after marriage. This can cause a lot of grief later. For investments like mutual funds, we stress on making either or survivor holding format with the spouse. In case of single holding, nomination is a must. A joint bank account is recommended because all of this ensures that the spouse is automatically in the loop and don’t face any hardships later on,” added Ashar. 

According to Sunder, the mark of a neat financial plan is when death does not disrupt the financial goals of the household. “Planning for goals is important but you also need to make sure your family faces no hardships. This will happen if you have made a Will, ensured adequate insurance and done your nominations properly. Because death does not change your financial goals. Things like planning for your child’s future, or managing your retirement years should not change,” she added. 

Ensuring the financial well-being of your family doesn’t stop at saving and buying adequate insurance; keeping them in the loop is essential to ensure they don’t face hardships later. Our special package will help you understand the importance of nomination in various financial products and creating a Will for smooth succession. For legal heirs, we have a ready reckoner to help them navigate various financial products and procedures to follow. Keep yourself informed.