I get at least one call a month saying…..somewhat like this:

“My ………..(father, mother, brother,….aunt) has died and has left a motley group of shares, fixed deposits, mutual funds, bank accounts, …do you have somebody who can handle all this?”

“Actually I do not think it is worth more than Rs. 10 Lakhs (the figure can change, just one of the numbers heard recently), and me or my sisters do not care about this…but we need a closure.”

ME: Oh ye dutiful Next of Kin…..what were you doing when this person was alive?

“Oh he was MANAGING his own portfolio, and we thought he was doing everything right….we did not ask him”

ME: What about his demat account and trading account?

“Arre he was trading in some shares, but I think over all he only lost some money over the past 3 years”

ME: You knew he was losing money?

Yes, Subra. But it was his only source of ENTERTAINMENT and we did not want to interfere.

ME: How many mutual fund schemes has he invested in?

Not sure Subra, I think about 32 schemes ….

ME: and pray, how much is the amount….

Not sure Subra, but I do not think it is worth more than Rs. 2 lakhs in all the schemes put together.

Subra tell me honestly what should I do with all this. Neither my sisters nor me are really interested in this money.

ME: Make a bonfire.

Subra you cannot be serious, right?

Well I am branded as a cynic, but if you guys had no time, no willingness, or no whatever to clear this mess when he/she was around, you will not want to go through the Indian messy legal system, right?

Sorry, but your………..X did not ‘manage’ his portfolio, he GROSSLY MESSED UP and created a shit of a ‘portfolio’. Many of the shares are delisted, are part of a promoter’s quota, cannot be sold or just vanished. Yes you have some high value shares like Reliance, Tata Steel, ……but getting it transferred to your Mother’s name is not easy. Some of these shares are held in joint names with your sisters and brother – and the signatures have been ‘done’ by your dad. Even they do not know what kinda signatures have been used. The mutual funds are little less messy. All you have to do is to send the death certificate of your dads and get it ‘transmitted’ to your mother’s name. However it makes sense to hold it in joint names of your Mom and you. For doing this you will have to get your KYC and your mother’s KYC done. This is a simple procedure but dealing with the mutual funds is avoidable if you have a choice.

I have no clue of any CA or lawyer who will be interested in a portfolio of Rs. 12 Lakhs, unless the fees is about Rs. 5 lakhs. Your heart will not allow for this, because SOMEBODY else will tell you it can be done cheaper, really cheap.

Frankly, BONFIRE is the best way out.

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  1. Dr M Chandrashekhar

    This is the exact story with one of my relatives who , at 80, thought he was Warren Buffet’s clone & left behind a messy portfolio as his legacy. His kids are running around in tight circles !

    BTW, Warren B is well organised !

    Another relative of mine left behind a well thought of portfolio for his NOK. He even left 2 lacs in cash for his cremation & willed that all the functions have to be done as per tradition– his kids–had to go thru 13 days of vedic rituals, though reluctantly.

  2. On this subject I was always curious on which option is better.. Putting your better half as joint holder on all your MF folios, Demat a/c, bank a/c etc, or to assign them as nominee.

  3. Subra,

    How can you ask people to burn their relatives’ investments by saying something similar to “If you didn’t help organize his/her portfolio when they were alive, no point in worrying about it now”

    You do know it is difficult to give advice to people as they get older? You tell them “Reduce the number of MF schemes you have, invest in blue-chips”, they’ll not only think “Oh, he thinks he’s smarter than me? He probably wants to take my money away”, AND they’ll start viewing you suspiciously.

    One can never “advise” relatives on how to manage their money. Just manage your own well.

    Subra, being a cynic is ok (I am one too), but it is wrong to poo-poo others for not taking care of everyone’s financial strategy (especially elders whom we cannot influence).

  4. Spouse whom you trust: Second holder
    Kids: Nominee if they are NOT WELL OFF FINANCIALLY
    second holder if they are well off financially and this amount is insignificant in their lives

  5. this article reminds me of my grandfather…….he was very active till his dying day……. he died 2 years ago and i am still trying to sort out the things he left…. and he was a big fan of dividend payout option in mutual funds and then investing in other funds…..and i hated that when he did it……but i have to be thankful to him to seed the idea in my mind that money saved has to be invested……..it is easier for me to criticize his actions now….lets see what i do as now the responsibility is on my shoulders…. i have to be thankful to you subra also….becoz reading your blog as been like a guiding light on the investment journey i started 2 yrs ago…..again thanks a lot!!!

  6. that’s a nice post and an interesting topic.

    Maybe you could also post sometime about the right strategy for taking care of such issues.

    For example what should I ask my parents to prepare for the unfortunate event, so that their savings and investments are not going down the drain, just because of the messy legal procedures.

  7. thanks Nikhil. Div payout is actually a LESS EFFICIENT way of investing. Always go for growth schemes, and decide to re-allocated based on your own allocation requirement….it is also very time consuming EVEN if you have the amount being credited to your account.

  8. Mr. Let it go, even though I am in the media I need to say actionable things. If a client/friend calls me and says…’I have a portfolio of Rs. 5L….and what should I do’ frankly I do not have a solution. I have no energy or desire to sort it out, neither does the caller. Sadly, Rs. 5L looks big, but requires effort to set it right…..which none of us is willing to give. So bonfire is the only solution, unless you can think of some other solution….

  9. Regarding 2nd holder versus nominee I think I should have qualified the question further.. My point is if the spouse is a home maker and doesn’t have direct earnings(doesn’t file IT returns) then from a taxation perspective is it ok to have the spouse as 2nd holder providing PAN details of spouse and getting all those extensive KYCs done.. From a taxation and IT filing perspective is it better to keep the non-earning member of the pair (no question of trust etc.) as nominee so they get access to your investments in the event of unfortunate death etc..

  10. best to have spouse as joint owner and bank accounts as either or survivor basis.
    One of the kids names as a nominee (Normally the one who will consolidate the leftovers)
    Lastly make a will stipulating who gets what. Nominee is not enough. Nominee is just the one who can colect the money and disburse it as per the will.

  11. During the paper share certificate era, if the company went bankrupt or delisted, atleast you had physical share certificates which you you could ‘burn’ if you wished and achieve closure.

    Nowadays, with the electronic demat entry, even after the company goes bankrupt or delists, you are left behind with those entries and cannot get rid of them. Would anybody help me get rid of demat shares of bankrupt/delisted/junk companies?

  12. unless there is zero balance of stock (shares) in your account, you can not close the account. I am in similar situation. Any solution? Even writing to SEBI has not given any solution.

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