Why mutual funds, FDs, and digital wallets must be part of your estate planning

Estate planning has usually been viewed in the narrow context of property and wills, but the world Has moved on, and your portfolio is much broader nowadays. Mutual funds, FDs, and even digital wallets are a significant portion of your financial footprint. Without express instructions, one’s heirs might hit a roadblock in gaining access to these assets. An effective estate plan will get your money to the people you love with seamless continuity.

Including mutual funds in estate planning

Mutual funds are easy to incorporate. All investors need to put in nominees to their folios, so that the mutual fund units can be auto-transferred to the nominee upon death. The transfer is seamless if the will also mentions the same person. If no nominee has been put in or the nominee is different from the will, legal heirs can be put through the legal process, delaying access to funds. Periodic updation of nominee information is essential.

Handling fixed deposits in estate planning

Fixed deposits, typically the cornerstone of judicious investing, can be trouble areas if no correct estate instructions are provided. Banks authorize nomination during the creation of the deposit to transfer the proceeds to the nominee on death. The nominee is still nothing more than a custodian until the legal heir makes out a claim, except where the will specifically corresponds with the nominee. The joint FDs with the “survivorship” clause will minimize complexity, but you should also correspondingly reflect the same in your will to avoid confusion.

Don’t forget your digital wallets too

From Paytm to Google Pay to PhonePe, digital wallets nowadays hold significant balances, loyalty points, or even locked-in investments like gold or insurance. Few are ever included in estate planning. A secure diary should be kept of wallet accounts and passwords and reference be made thereto in estate documents. Certain issuers insist upon legal heirs producing a death certificate along with proof of relationship to release monies. Specifying clearly a nominee where the option is exercisable can be helpful.

The significance of will and nominee congruence

In mutual funds, FDs, or digital wallets, aligning your will with nominee information avoids conflict. A will prevails over nomination in the event of a conflict, but aligning both is the most elegant solution. Reviewing such details annually keeps one’s estate plan current with the evolution of one’s life such as marriage, divorce, or the arrival of children.

FAQsQ1. Will I still be obligated to specify my nominee in my will if I am appointing one on my mutual fund?

True. The nominee can be given the monies, but the will specifies the legal heir. To prevent trouble, it is best that the will as well as the nominee both indicate the same individual.

Q2. What if I forget to put my digital wallets into my will?

Your beneficiaries will need to present legal documents to the service provider, hence the delay in use. Storing records of accounts as well as identifying them in the will facilitates easy transfer.

Q3. Can joint fixed deposits bypass probate?

Yes, should they have a “survivor” clause, the surviving possessor automatically assumes ownership. Nevertheless, putting them in your estate plan settles ownership as time goes on.