Section V – Advance preparation for disability or death of main decision maker

A financial database must be built to ensure that all the assets are inventoried, and the title transfer process is kicked off. Usually, the families start the rebuilding of financial data base after the loss of a loved one.

It really helps if there was already an Inventory of Assets available and if measures were taken in advance to cope with any eventuality.

The following templates can assist in the preparation of the inventory of assets:

Financial Assets Inventory Template

What my Family should know.xls (this is a downloadable google sheet file)

The sudden serious illness of a loved one requiring artificial life maintenance systems means that the loved ones may need to make life or death decisions for the ill. Normally nobody is prepared for taking such decisions.

Consider this real-life example faced by an ARIA member. The member’s 83-year-old father was admitted to a hospital after a serious stroke. His condition was critical, and doctors asked him to provide consent for use of a ventilator (an artificial life maintenance device), if required. The consent to use was irrevocable. It meant that if the member consented to the use of a ventilator and his father was put on the ventilator, then till the demise of the patient or his getting better the ventilator would not be taken off even if the member wanted it later. Naturally if he did not give consent, his father would not be put on the ventilator and the consequences of that decision would follow. It was literally a life and death decision for which he was just not ready. Neither he nor his sibling or his other close family members knew about his father’s own view on the subject. It would have been a very crucial input that would have made the tough decision a tad easier. In any case after an excruciating one hour spent on talking it over with his close family the member was able to take a decision and convey it to the doctors. In his case fortunately his father’s condition improved enough so that the ventilator was not needed.

This shows the need for families to have such discussions among themselves. That decision is not about legally binding wishes (a Living will or Advance Health Directive or a Do not resuscitate (DNR) order). This is more about letting your loved ones know what your wishes are so that, if (God forbid) they ever must take the decision, they are not missing the critical input that he did not have. These wishes are not legally binding. They are just a guidepost for the loved ones. Given that artificial life maintenance treatments are so expensive, most hospitals in India will not put the patient on those devices unless they have written consent from the patient’s close relatives.

If you so desire, you can also document your views in this non legally binding Letter of Instructions regarding health treatment. Remember it is the discussion and letting your loved ones know your views that is important. The documentation is just for their comfort if (God forbid) they have to ever take that decision. Letter of instructions regarding my health treatment.doc

Consider this example of Sunil who went through a rather harrowing time.  His 83-year-old father was hospitalised after a massive stroke. While prompt medical attention ensured his survival, his bodily functions were severely impacted. His speech, cognition, communication was severely impacted. He was just able to recognise Sunil, his elder sister Shristi, their kids and some close friends.

Sunil’s experience holds lessons for all of us. Sunil’s father was a widower and financially independent. Sunil and Shristi were the only heirs. His assets were held in his own personal name, but he had no­m­­inations in place. Even his ph­o­n­e number and email id were registered with banks and the de­p­o­sitory participant. He had debit cards for all his bank acco­u­n­ts. He had also made his Will and registered it. In other words, he was well prepared for any eventuality.

Sunil’s father needed continuous care even after discharge. So, Sunil and his sister had to access his bank accounts and Demat accounts to take care of costs. “Though we were nominees, we could not access the accounts,” says Sunil, because the account holder was alive. All the Estate Planning measurements kick in only at the demise of account holders. The option available to them was:

Approach the high court to be appointed as guardians. But the process to be appointed as Guardians it was a time-consuming and expensive process.

Luckily since his father had not lost all his faculties, easier avenues were available. First, Sunil took charge of the phone and email id and looked at the practical ay of handling such situation.

His father had three bank accounts.

• In the first private sector bank account, it was simple to activate the internet banking account and the debit card using his mobile number and email account.
• In the second private sector bank account, they approached the branch manager and explained the situation. The manager sent a bank officer to get his father’s thumb impression on a form adding their names as joint holders.
• Similar approval was taken to activate Sunil’s signature as PoA holder in the Demat account.
• The third account was with a public sector bank, where things were again handled similarly where the bank officer came home to take the thumb impression of Sunil’s father.

In all Sunil and Shrishti were able to access their father’s financial resources to use in his treatment.

Unfortunately, incapacitation of the kind experienced by Sunil’s father has become more common than ever. Estate planning will need to include not only after demise, but also the intermediate stage of disability and emergency. The tradeoff for any such solution is that the trusted person may betray the trust and misuse the funds. Whether to take the risk or not is a personal decision that each investor has to take.

When you decide to take preventive measures for such situations, here are some things that you could do to prepare for disability :

• Bank accounts: Add the name of the trusted person as a joint holder (on either or survivor basis). Name of the spouse /children in the existing bank accounts itself. This allows them to operate the bank account in your absence.
• Store the password of your emails, bank accounts, demat etc. through a password vault like Truekey, Lastpass, Keeper, Dashlane, etc. and share that single password with the trusted person
• Provide access to your mobile to the trusted person by adding their fingerprint, sharing pattern access, password etc.
• Execute a power of attorney in favour of the trusted person in advance. The power of attorney can detail all the assets in respect of which the power of attorney holder can act on behalf of the holder. The power of attorney could be conditional (i.e. it becomes applicable only if the person is incapacitated) or it could be unconditional. In India it is possible that the power of attorney may not remain valid after the mental incapacitation of the person giving the power of attorney. In practice though a pre-executed power of attorney is of great help in dealing with such situations. If the assets include immovable assets, then the Power of Attorney would need to be registered with the registrar. This could attract significant stamp duty and registration charges in many states. In Maharashtra if the power of attorney is given to spouse or children in respect of residential flat or agricultural land then it attracts nominal stamp duty and registration charges.
  Downloadable documents:
  1) format of conditional POA.doc
  2). format of unconditional POA.doc
• Conditional Settlement Deed in favour of a family member can be an economical vehicle in few states.
• Please keep the family informed of your financial affair by using the checklist/excel sheet detailed in earlier section. What my Family should know.xls (this is a downloadable google sheet file)

Remember:

• Nominee holds the assets in trust for the true legal heirs.
• Nomination only eases the process of transfer of assets after death. It does not confer title on the nominee.
• Only exception is the nominee of a life insurance policy who is the parent, spouse, or child of the policy holder
• Every Individual should make a will specifying the beneficiaries for all their assets.
• Nominations should match the beneficiaries under the will to avoid confusion.
• Several online services are also available to generate a will.
• Simple drafts are also available on the Internet.

Will is an important document – ideally consult a proper legal or investment adviser before preparing it.

Last updated on 21 August, 2021

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