Nominations and addresses are of paramount importance in bank accounts, insurance policies, mutual funds, etc.
With just days left for the new year, it's an opportune time to undertake a financial housekeeping exercise.
Take care of a few key operational aspects of your finances, which would then set the stage for more complex activities like goal review, portfolio check, rebalancing and so on.
Update your nominations
Make sure that all your nominations and addresses are up-to-date. It ensures that your heirs don't face any complications in the future.
Nominations and addresses are of paramount importance in bank accounts, insurance policies, mutual funds, etc.
Says Aashwyn Singh, associate, SKV Law Offices: "They (nominations) determine who will receive the benefits from these instruments in the event of the account holder's death or accident."
"Regular reviews and updates are crucial to ensure that your nominations align with your current circumstances and wishes," he adds.
Singh advises maintaining a secure record of all nominations and addresses in a secure place for future reference.
In a joint bank account, the operating condition could be 'either or survivor' or 'jointly'.
Says M Barve, founder, MB Wealth Financial Solutions: "In 'either or survivor' accounts, the survivor can claim the deposit. Nonetheless, it's prudent to nominate someone even in such an account."
Review a fresh credit report
Credit reports reflect your financial history, including credit accounts, payment history, and outstanding debts.
Says Adhil Shetty, CEO, Bankbazaar: "Regularly checking your credit report helps in early detection of identity theft or fraudulent activity."
"If you spot unfamiliar accounts or transactions, take immediate steps to rectify the situation and prevent further damage to your credit profile," adds Shetty.
Fintechs like BankBazaar offer credit monitoring services. Says Shetty: "If you find inaccuracies, dispute them with the credit bureau."
Jigar Patel, member, Association of Registered Investment Advisors, emphasises the importance of maintaining a high credit score.
"It can help you get higher credit limits, and loans at favourable rates and terms (no penalty, fewer charges, longer tenure, etc)."
Close loans properly
Paying off your last equated monthly installment (EMI) doesn't automatically close your loan.
Says Barve: "Once you've made the final EMI payment, write a letter to your lender asking them to close your loan account and return any collateral documents you gave."
The lender will process the request and return all the original documents, usually within 7 to 10 working days.
Says Shetty: "Even after you have closed your loan, retain the loan-related documents for the next five years. Having accurate records is essential, especially in the case of secured loans."
You may need to furnish them while selling or mortgaging the asset.
Make sure that all the documents submitted at the time of borrowing are returned, including the sale deed, title deed, loan agreement, and power of attorney.
Other documents you must receive include a final statement, a possession letter, a no objection certificate (NOC), and other correspondence related to loan closure.
Says Barve: "The NOC should mention details like the borrower's name, address, home loan account number, loan starting and closure date, and amount borrowed and repaid." It should also mention that the property is debt-free.
If any lien exists, both the borrower and a bank representative must appear at the registrar's office to remove it.
Rebuild emergency corpus
Replenishing your emergency fund, if depleted, is another key task.
Emergency funds enable the family to meet unanticipated costs that may arise due to medical emergencies, job losses, etc.
Patel suggests prioritising replenishment of the emergency fund before budgeting for any big-ticket expense.
"Emergency funds can be kept at home or in accessible instruments like savings or auto-fixed deposit accounts at banks, or in liquid and ultra-short debt mutual funds."
Feature Presentation: Ashish Narsale/Rediff.com
