How Inheritance in the Absence of a Will Works?
What is yours today will be someone else’s tomorrow, underlines the core philosophy of the Bhagavad Gita. Religious texts apart, inheritance or passing on of legacy for both tangible and intangible assets to your chosen ones, is a stark reality of life. Dealing with the loss of a loved one can be tough. What can be equally challenging is the process of transferring the ownership of a deceased’s assets to surviving family members.
If a Hindu, Jain, Buddhist or Sikh person dies without a Will, the wealth of the person will be divided on the basis of the ‘Hindu Succession Act’. At the first instance, the person’s property will go to Class I heirs. These include son/daughter, widow, mother, son/daughter of the predeceased daughter, widow of the predeceased son, and son/daughter of the predeceased person in a manner laid down in the law. Please note that the demised person’s or family’s wishes do not matter in such a case.
If Class I heirs do not exist, then the property will go to Class II heirs. These include father, son’s/daughter’s son, son’s/daughter’s daughter, brother, sister among some others.
In the absence of Class I and II heirs, the property of the deceased goes to, and in their absence, to Cognates. Agnates are distant blood relatives of male lineage, while cognates are distant blood relatives of male or female lineage.
If these too are not there, the estate goes to the government.
Documents required in the absence of a Will
- In the case of movable property, a Succession Certificate is required.
- In the case of immovable property, a Letter of Administration is required which is issued by the court.
It is always advisable to write a will, preferably get it registered and keep it safe within the knowledge of the next kin alive to avoid any complication for the near and dear ones to whom one wants to pass on the estate.
Feel free to contact us for the free format of a WILL by contacting your financial advisor in the company if you’re our existing client and filling in the drop-down form on our website otherwise.
(Contributed by Kritika Saini, Assistant Manager, Team Sukhoi, Hum Fauji Initiatives)
Stop Chasing Top-Performing Funds
A common mistake that investors make is chasing funds that are currently giving the highest returns. And then, they make the second mistake of selling funds after just a few months of underperformance.
This ‘performance chasing’ can be quite detrimental to an investor’s portfolio. Performance chasing involves buying and selling mutual funds based on short-term performance trends, which can lead to higher transaction costs and high taxes, and thus lower overall returns. In fact, research has shown that current top-performing funds tend to underperform in the future.
Instead of solely focusing on the performance of mutual funds, it’s important to take a more holistic approach to investing.
Define your financial goals – Before you start investing, it’s important to have a clear idea of what you’re investing for. Whether it’s retirement, a down payment on a house, or your children’s education, your goals will determine how much you need to save and what types of investments you should consider.
Your risk tolerance – An investor’s risk tolerance is the amount of risk they feel comfortable taking or the level of uncertainty they can tolerate. Age, income, and financial objectives all normally affect risk tolerance.
Diversification – Diversification is key to managing risk in your portfolio. It is a good idea to spread your investments across multiple mutual funds and asset classes which will help you to reduce the impact of any one investment on your overall portfolio.
Stick to your plan: Investing requires patience and discipline, as they say, that good investing is like watching the grass grow! It’s important to stick to your investment plan and avoid making impulsive decisions based on short-term market fluctuations or the latest investment fads.
Chasing top-performing mutual funds is a common mistake made by many investors. While past performance can provide some insight into a fund’s potential, it is not a reliable indicator of future performance too. Instead choose funds which have given consistent above-average performance. Stick with them for 5-10 years even if they underperform. You will make more money than chasing the top funds.
(Contributed by Abhilash Rana, Financial Planner, HNI Desk, Hum Fauji Initiatives)
Should you buy Gold now when everybody is saying that it’ll go higher?
Gold prices had peaked at about Rs 58,000 per 10 grams (a Tola, for 24 Carat Gold) in Aug 2020, reached a low of about Rs 45,500 in Mar 2021 and have risen again, all this in fits and starts. Should you buy Gold now when everybody seems to be recommending it?
Where is Gold finally headed?
Please note that Gold usually exceeds performance expectations whenever there are heightened uncertainties and volatility in the markets. That’s why it is not surprising that the Covid-19 outbreak triggered the peaking of its prices and when economies stabilized, Gold retreated. Now again, Ukraine and high inflation has made gold prices rise.
In fact, if you see a long-term price chart of Gold, you would get the feeling of looking at a volatile stock price chart!
Also, Covid brought abundant cash liquidity in the world, leading to peaking of all metal and commodity prices which ultimately increased inflation to all-time highs. Even otherwise, the love for this yellow metal is not going away any time soon from our psyche.
So, it makes sense to get into a bit of Gold as an investment, typically 5-10% of your investments be in Gold. Having gold in your portfolio can also provide you a cushion against heightened market risks and uncertainties. But nobody can predict the movement of prices of such investments.
Please never buy Gold as an investment at one go – you never know whether prices will crash immediately thereafter!
What is the best way to buy Gold then?
Buying jewellery with high making charges would be a waste of your money. Digital forms like Sovereign Gold Bonds (SGB) or Gold ETFs are better options if you’re putting in bulk money and Gold Mutual Funds if you want to invest small amount regularly. Even here, beware of the peculiarities of each, like SGBs have a long lock-in period.