Laxmi and Venu love their father like a friend. From Bollywood movies to cricket matches, they wouldn't miss an opportunity to involve their father Haresh in their impromptu plans. They would discuss everything right from friends to social media; but discussion on finance rarely happens. At times, Haresh tried to discuss, but the kids didn't want any discussion. They stated: "We know that you love us and that's all we expect from you. We know you shall take best decisions for our family." In spite of several attempts, it never got materialised. This is the scenario in most households today. Kids do not want to involve themselves in finances and we do not foresee anything, unfortunate happening to our family.
Being a responsible head of the family, I suggest one should not take any chance as life has become uncertain. Proactively, one should prepare his dependents for the uncertainties of life. Its best to start with getting more organised, especially with investment papers and basic things like writing a will, making a living trust or planning for incapacity.Incapacity – A living death
Being in a position of incapacity, may involve being in a vegetative state, coma, Alzheimer, dementia etc. One doesn't die but in such a situation, s/he is physically challenged or mentally incapable to make important financial decisions. Unfortunately, when the head of the family becomes incapacitated, dependents go through a tough phase as they need funds for medical treatment of the person being incapacitated. But investments or an emergency fund cannot be used as the family is not even aware. Even if they are aware, there are no provisions made to access the same in an emergency.Organise to empower
To avoid a situation where the family members have to run from pillar to post getting into complex court matters, one should first organise investment papers at one place and make at least the partner aware about them. Give basic knowledge about investments made and what to do in case of emergencies. One extra step may be taken to digitise everything, so that your family members should be able to access these at a single click.Set up a revocable living trust to deal with incapacity
To deal with a situation of being incapacitated, one needs to form a 'living trust'. A living trust is a written legal document through which your assets are placed in a trust during your lifetime and then transferred to your designated beneficiaries on your death by a chosen representative who is called as 'successor trustee'.
In a living trust scenario, the assets get transferred from the name of head of the family to the name of the trust, where apart from the head of the family, other members are also trustees. Since various members of the family are trustees, either of them can act and have instant control, if someone becomes incapacitated or dies.
There are numerous advantages of a living trust over writing a will and the most important is avoiding probate, or official proving of a will. In case of a will, the dependents have to run pillar to post for probate, which is a time consuming and a tedious process. But keep in mind that a disgruntled heir has the ability to challenge the Trust as well as Will.
These issues are sensitive and family members might restrain the head of the family from talking about these. However, one must understand that a discussion is worth it as it is for the benefit of family members. Why not plan gracefully for a situation where one might get incapacitated or for death.
Also, I suggest subscription to services of one of the organisations, which help or guide dependents in such scenarios.