The Best Gift for your Parents and Family

Amar Pandit , CFA , CFP

All of us understand the role Documentation plays in our lives. The trailer of the movie “Kaagaz” is hilarious and explains the importance of documentation in our lives in a very different way. Sercan Leylek’s quote is perfectly apt here “If it’s not written, it never happened. If it is written, it does not matter what happened”.  Despite its importance, most of us have serious challenges in organizing and maintaining our documentation. We do not seem to get documents the very moment we need it, and we end up wasting precious time (and our life) finding these documents. I have seen many families go through tremendous hardships because they did not have proper documentation in place and some who could not find the documents. Archana and Rekha (names changed) were 2 daughters who had to go through an ordeal like this.

Archana was a senior corporate executive who lived in the US with her family and her sister Rekha lived in Delhi with her family. Their father, Prasad Ramanathan, a Corporate Executive himself (living alone in Mumbai) passed away suddenly leaving no Will or even a Summary of Documentation in Place. Archana was referred to us through a client and she reached out for help on her father’s estate matter. We met the secretary of her father and got an excel sheet of the investments that he had done. Archana managed to find some additional stuff. We quickly stitched together everything such as Bank Accounts, Insurances, Investments, Tax Returns, Statement of Income, Net worth Statement and Real Estate to name a few. This gentleman had Bank accounts, Deposits, PPF, Post Office Investments, Insurance Policies, Mutual Funds, and Real Estate. He had also lent money to a builder who then refused to pay back. I will not get into the details of this story here, but it took us almost 11 + months and more to get everything back on Archana and Rekha’s name. This involved a lot of work (300+ hours of work) from our end including “negotiation with the builder” to even something as basic as arranging a SIM card for Archana when she came to India. We project managed the entire engagement and did the work like we were doing it for our parents and family. All worked out well in the end, but I cannot begin to explain the challenges and frustrations that Archana, Rekha and all of us had to go through at that point of time. Thus, it is so important to help organize our parent’s documents including their finances and estate plan.

We do not organize because something bad is going to happen, but we do it because in case something does happen, we are not only prepared, but we can take charge and manage it effectively. The best part is that we have helped them organize (even when nothing happens) and given them immense peace of mind knowing that things have been taken care of. This is one of the best gifts to give your parents and family members.

Where do we Begin?

  1. My January 12th ,2021 post about “Uncomfortable Conversations with your Elderly Parents and Siblingswas extremely well received. I would say this is the area to always Begin. Start with the small conversations as this sets the foundation for having critical conversations. Even a simple script such as “Mom and Dad, I know you are well organized or have done all your documentation properly; do you need help or information on any area. Even if I am unable to help, I will figure out someone who can help”. Depending on the response, you can ask a couple of questions “How have you arranged your documents or Is there something we (you and your siblings) should be knowing?” This helps set the foundation for bigger conversations. I am not even getting into the area of succession planning conversations for business owners or some deeper conversations in case of special children.
  2. One of the key points to remember here is to block some separate time (even if it is for 15 minutes). Do not mix this with dinner time or family time conversations.
  3. Now that you have started and set some dedicated time for this, the first area to help them is with Documentation. The basic areas of documentation are banking, financial (including assets, liabilities, and sources of income), legal, taxation, real estate and your work. There are personal categories such as photos, movie collection, book collection and so on. As I mentioned in the Uncomfortable Conversations post, there are 18 Master categories of documentation that we have created in MLHD (My Life Happily Documented) along with a Master Executive Summary of all documents for easy retrieval. Have a Master Executive Summary of all the documents.
  4. Digitize all the above. It is extremely important to digitize all the documents not just for faster retrieval but also as a backup in case of any wear and tear of the documents.
  5. Once you or they have done the inventory of all documents, ensure that there is a Nomination on every bank account, investment, insurance, real estate and so on.
  6. The next step then is to create a Net-worth Statement and an Income Statement. This will give you a complete financial picture of all assets, liabilities, and income sources.
  7. Ensure they have the relevant insurances in place or if they cannot be insured for whatever purpose, you must self-insure. If they do not have sufficient assets, you and your siblings will have to assume this role. I see many families who are asset rich but very low income and thus will require support from children. There are times when parents have to go through complex surgeries/procedures and with the nature of health insurance settlements, expect to have outflows initially on this front. The point is to be prepared. With expected longevity, and increasing costs of healthcare, this is an area to plan for on a priority basis.
  8. With digital adoption by our parents, this is the best time to set up online access for them and to teach them how to access information and bank accounts.
  9. Help them Manage and protect all their passwords (email, bank accounts, and others) with a Password Manager Tool (App). I use 1 Password and it is one of the best tools available along with LastPass. You can also get them to give you this password depending on their age.
  10. Read my previous post on The Estate Planning Checklist that has been accelerated by COVID-19 and have basic estate planning documents in place (Limited Power of Attorney and Will).
  11. If you are living abroad or not in the same city as your parents, get introduced to their key friends, people, helpers, and their circle. I am not saying you need to socialize with them, but you need to be aware of their circle of influence and the key people besides us in their lives.

Finally, it is their life and parents have a certain way of doing things. Do not dictate anything; Guide them and let them drive the process (so that they feel they are in control). Remember Christina Scalise’s quote, Organization isn’t about perfection; it’s about efficiency, reducing stress and clutter, saving time and money and improving your overall quality of life“.