The death of a family member brings emotional upheaval, often disrupting financial discipline at a critical time. However, this is precisely when staying focused on financial matters becomes crucial—neglecting them can jeopardise the family’s future. Timely, well-structured decisions can provide much-needed stability. Here’s a checklist to help navigate finances during such a testing time
Death Certificate
“The passing of a loved one is a period of profound emotional strain and there is a critical time window to securing a family’s financial future which starts with obtaining death certificate and auditing all existing assets and liabilities,” comments Abhishek Kumar, SEBI RIA, Founder- SahajMoney
Issued by the government to the deceased’s next of kin, it records essential details such as the date, time, and cause of death. Typically, up to ten copies can be obtained, each carrying a unique serial number.
Assets and Liabilities
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What are the first financial steps to take after a loved one passes away?⌵
The first crucial steps involve obtaining a death certificate and then auditing all existing assets and liabilities. It’s also important to notify insurance providers within the standard 60-day window and identify if a valid will exists to streamline asset transfer.
How should families handle the deceased’s assets and liabilities?⌵
Families should create a comprehensive list of the deceased’s assets (like bank accounts, shares, real estate) and liabilities (credit card debt, loans, bills). After listing, it’s important to transfer assets to the kin’s name and clear any outstanding liabilities as soon as possible.
What is the process for claiming insurance after a death?⌵
You should notify insurance providers within the typical 30-60 day window, as claim settlement can take time. Initiating the process early helps avoid unnecessary delays in receiving the insurance proceeds.
How does a will simplify financial matters after a death?⌵
A valid will, even if written on plain paper and signed by the testator with two witnesses, makes the nomination facilities for various assets very smooth and efficient. It helps streamline the legal transfer of property, bank accounts, and investment holdings.
How can families re-plan their finances after losing a primary earner?⌵
After notifying institutions and transferring assets, families should re-plan their finances. Judiciously deploy life insurance claim proceeds and manage other investment funds. They should evaluate long-term financial stability by managing expenses and reinvesting savings to bridge the income gap.
It is important that the kin of the deceased makes a list of assets and liabilities. Assets can be in the form of bank account, shares-mutual funds, real estate, insurances etc. Liabilities, on the other hand, could be credit card, tax, loans, equated monthly installments, bills and so on.
Once the assets and liabilities are listed, it is important to transfer these to kin’s name and clear the liabilities as early as possible.
Insurance
In case of insurance, the normal duration (for notifying) would be between 30-60 days; this can be different for different insurance companies. It is important to act quickly, as the claim settlement process can take time, and initiating it early helps avoid unnecessary delays.
Will
Will is one of the most important financial documents. It can be written even on a blank paper, there no obligation that a stamp paper needs to be used. It will be noted as valid if it is signed by the person making the will (the testator) and witnessed by at least two people.
If there is a will, it makes the nomination facilities for various assets very smooth and efficient
“One should Immediately prioritise must include notifying insurance providers within the standard 60 day window and identifying existence of a valid will to streamline the legal transfer of property, bank accounts, and investment holdings of the deceased member of the family,” adds Kumar
Re-planning Finance
On notifying the institutions and transferring assets as per the will, it is important to re-plan the family finances.
If the deceased had a life insurance policy, the claim proceeds should be deployed or used judiciously. Likewise, funds received from other investments should also be managed and reinvested in a prudent and efficient manner.
For example, in case of the death of an earning member, the future income from investments and insurance claims may not match the regular income earned by him or her.
Hence, “The family should proactively evaluate their long term financial stability by managing their living expenses in a sustainable manner along with reinvesting insurance claim proceeds and other savings to bridge the gap left by a lost primary earner,” concludes Kumar.