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Life after Death Overall RATE RATE (0.00)


In India, a spiritual Guru talking about preparation for death is understandable where hundreds of discourses are on Sanyas, Moksha, Detachment, etc. However, a person in family bliss has many social and financial responsibilities. So, it is least expected of him to talk about preparation for death.


If we look at this issue of death, philosophically and spiritually all the wealth that we generate during our lifetime is left with our near and dear ones.  We hope that it is of use to them and we are able to continue to support them financially even if we are physically absent.


Today, I wish to talk about some of the precautions that one needs to take to ensure that the wealth generated during your lifetime is inherited by the desirable person.


Investment - First Medium


The first medium of investment that any person makes is by way of a saving bank account or a fixed deposit. There are two options available - having a joint account and nomination. Having a second name in your account is very important.  There is operational convenience when two persons operate the account further; the balance money is at the disposal to the next person named in the account.


Typically young boys and girls who take jobs fresh out of college open salary accounts through their company and do not take the trouble of adding another name. But in the long run such effort is well spent.


Also in case of bank lockers, generally the wife goes and opens the locker and husbands do not have time to go and sign.


Fixed deposits also suffer the same fate.


Banking Companies (Nomination) Rules 1985 permits banks to pay dues to nominees in the event of death of depositor(s) without asking for succession certificate or verifying claims of legal heirs. This simplifies settlement. There can be only one Nominee for a deposit account whether held singly or jointly. There can be two nominees for a jointly held locker.


Investment - Second Medium


The next medium of investment is often Life Insurance Policies. 


It is important that premiums are paid on time and policies do not lapse. It is possible to get status of your policies from the insurance agent or the insurance company directly. All policies must have a nomination. In event there are changes in your family structure for example on getting married you may wish to change your nomination from your father / mother / brother to your wife or you may wish to change the same from your wife to your children. As life goes ahead, these changes should be made in your insurance policies also.


In event you mortgage your policy for loans, etc. the nominations gets void. After you repay the loan the original nomination should be resorted. This requires some fresh paper work. Nominations allows the nominee only to collect the money from the Insurance Company on behalf of Class I heir, which includes mother, spouse and children. Hence a will is necessary to divide these sums to the desired recipient.


Residential flats in housing societies must carry the nomination of the person to whom you wish to assign or put one to occupy. Lengthy court procedure is required in order to secure the rights of ownership by your desired occupant in event of improper paper work.


Investment - Third Medium


Shares and mutual funds are next class of assets, which are often neglected in terms of ensuring their perpetual usability. Several people have shares in their own name without any other name attached to it. On the other side, some people have many names and such persons may not be ready to part with the ownership in favor of the person that you desire to claim your inheritance.


For example: shares may carry only the husbands name, or the shares may carry the husbands and his brother's or sister's name who are not ready to execute the transfer deeds in event of death of first holder. Court probates have to be obtained in order to direct the company to transfer shares to desired claimants if the shares are in single name. It takes 3 to 4 years to get such probates on average and there is a cost of legal fees, which adds to the burden. 


Though nominations are given in depository accounts, the companies are not bound to follow these nominations and transfer the shares to the nominee. Nominations have been provided in the Depository Act in anticipation of changes in Companies Act. However, the Companies Act never got amended to include such nominations hence companies which are governed by the Companies Act would insist on court probates for transferring the shares.


If you have a depository account with single name then open another account with two names and transfer the shares from single account to the account where there are two holders.   Never ever have shares in single name.


Nominations should also be given in your provident fund and pension accounts. Claims can be easily processed if proper nominations have been filed. Please change the nominations as your family grows from time to time.


Many people believe that giving Power of Attorney would be sufficient to transfer your assets to your near and dear ones. It is important to know that the power of attorney expires moment a person dies. A non-existent person cannot delegate or transfer the power.


I Pray to God that all our investors have long and healthy life. Yet the pressures of urban living have led to lot of stress and serious impact on young people.  The advice given above is not just relevant for untimely death but also for all those who are prudent and would want to preserve their wealth at all times.



Written By:


Deena A. Mehta

Managing Director

Asit C. Mehta Investments



Written by : blog admin

Why do we need Financial Planning? Overall RATE RATE (5.00)

“Subse Bada Rupaiah”… The saying could not be truer when it comes to the management of Personal finances. There is no getting away from having to manage it properly, irrespective of what one does professionally.  Income inflows during our working life of about 35 years has its ups and downs and  needs to be properly aligned to outflows (both mandatory and voluntary).


We also need to provide for about 15 years post retirement based on average life expectancy of 75 years. For the first 25 years we are the responsibility of our parents and after 60, that is, for the next 15 years, we have to rely on ourselves; or if we are lucky, our children will take care of us.


This inconsistency between our life's earnings and life span and also uneven nature of flows, requires us to manage our finances properly. We may earn lots of money in our working years, which may be enough to maintain us when we are not working. Yet earning is not enough, we need to preserve and augment this wealth.


Wealth Depreciation


  1. Inflation


    Wealth depreciates in several ways. Inflation is a monster that can eat into your savings. Without doing anything, the value of money keeps declining year after year. This is known as a fall in the purchasing power of money. You may be able to buy all your household provisions for say, Rs.5000 today, but over a period of time, the same food items and quantities would cost you Rs.6000. Thus, if you are unable to earn that extra Rs.1000, your capital will reduce due to the extra expenditure. The returns on your capital have to be more than the rate of inflation so that the increases in prices do not make you go out of pocket.


  2. Interest Rates


    The second risk to your capital is falling interest rates. The government and banks assured you of high rate of interest on instruments such as PPF, NSC, bank deposits, etc. These instruments or schemes are through banks or government agencies which channelized your savings in industrial projects, etc. Due to availability of cheap funds overseas or through equity, the same rates are no longer available to those agencies. Companies are also performing better and are able to get money at competitive rates. The government borrowed for itself in order to fund the fiscal deficits. As per financial prudence, it is now essential for governments to reduce deficit financing. To look at the overall picture, the reduction in interest rates by banks and the government is an indirect message to the investor: We cannot manage your money any more. Do it yourself. 


  3. Spending


    The biggest danger to your money is the desire to spend. During our working years, the flow of money is so good that we may not think of saving adequately. We are busy enjoying our prosperity, going on shopping sprees, taking our families to the cinema or dining out rather then spending time on financial planning and management. We also want to give our families all the comforts that we didn't have in childhood. The residual income, after spending, accrues in a bank account and is often parked in Fixed Deposits with the banks themselves. At the most, we may go in for insurance policies if we bump into a persuasive insurance agent.


    Shares and Mutual Fund units are bought every now and then but again there is no conscious attempt at building a portfolio. Thus, a successful company executive, bureaucrat or businessman suddenly finds that after retirement, his monthly cheque stops and his pension is a lot less than that. The shares that he bought and forgot about are worthless, bank deposits and such other fixed-income investments do not yield enough to take care of monthly outgoings to maintain the lifestyle he had. He does not know the investment options available. He gets some funds at retirement but even before the income on the same starts coming in, it is slowly getting used up. The worst scenario is when an unexpected illness strikes. This is indeed a gloomy picture. I am exaggerating a little to shake you up and take a serious look at financial planning.


    As we grow in years, we must plan. If you are in your early 20s, the plan would include getting married, buying a house and other symbols of status and comfort, such as a car, television and other white goods. Planning for a child and donations, if required, to secure school admission, would be the next target. As children grow older, a bigger house may be on the agenda. Foreign vacations are add-ons that need to be thought of; higher education of children, settling them professionally, marriages…comes next.


    Once family responsibilities are complete, the next challenge is to maintain your standard of living, have the same number of servants, pay your society maintenance and continue to fulfill your social commitments. This is not to ignore medical emergencies, such as a cataract operation, knee replacement, and prostate or bypass surgery if you have led a stressful life. The outlay list is never ending. Thank God no one thinks of building a Taj Mahal in memory of a loved one. It's clear then that at each stage of our life we need a fixed sum of money to meet our financial requirements.


    Our challenge begins in living within our means and setting aside a certain portion to meet the cash flow requirements. The challenge is also to make the money saved grow at a certain rate so that the shortfall is available and required cash is not there. Based on your targets you can decide where to invest. You have to study the various investment options and the returns they offer and the risk associated with each of them. Understanding the risk of losing money is as important as knowing the likely returns. At the end of the day, the best return option may not meet with your cash flow requirement. You will then have to prune your expectations and settle for less.


    Financial Planning is an important means to a contented life. It makes you realize your responsibilities well before they make their presence felt. It makes you aware about the financial instruments that are available and the risk return profile of each of them, apart from taxation laws and their benefits. Investments thus become an important earning member for your family. You are not slogging all the time, but can also enjoy your wealth by letting investments and the return on them share your burden.



    Happy Planning!!!



    Written By:


    Deena A. Mehta

    Managing Director

    Asit C. Mehta Investment


Written by : blog admin

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