6 Steps to take when you are managing money for someone else.


What is the best way to look after someone else’s money? How do you draw the lines and keep your wealth safe? Following the unfortunate death of his sister and brother-in-law from covid, a loyal friend has been entrusted with the guardianship of his 19-year-old nephew. He has a terrific relationship with the boy, but he’s not sure how to make the most of it when it comes to money. The young man is a boarder in another city and is studying engineering. While his parents’ untimely deaths have left him profoundly disturbed, he realizes that he must rely on his uncle to manage his affairs. He intends to return to his studies as soon as possible, and he is confident that he will take care of everything. My friend is concerned. He is financially astute, yet he is unsure about deciding these circumstances. And he’s not sure where to turn for help. What are the next steps?

First and foremost, the deceased’s fortune must be determined and listed. In the perspective of their bank, mutual fund, insurance company, Demat service provider, broker, and other financial organizations, the boy is an autonomous adult because he is over the age of 18. He is likely to have a bank account because he lives and studies in a different city.

The son will have to file a claim for the deceased parents’ real estate. He will be required to furnish death certificates and file claims for funds that may be held in PF accounts and other financial institutions. He will also be entitled to any insurance proceeds due to his parent’s deaths. If he gets nominated, the procedure is simplified and expedited. Before any other action can be taken, the assets must be transferred to him.

Second, to manage any of the financial accounts once they have been transmitted, the uncle will need to obtain a power of attorney (PoA) from his nephew. The nephew should have enough faith in the uncle to give him such authority to manage the accounts. This arrangement relieves the young man of managing the assets and placing them on the uncle.

Third, the young man should be aware of the inheritance he is receiving. There’s always the possibility that someone is too young to be involved in financial transactions or that money will be misappropriated if such disclosures are made. However, the boy must know what has been left behind in the interest of transparency and fairness and the fact that he is the sole beneficiary of the assets.

Fourth, the arrangement’s general guidelines should be understood and, ideally, documented. For example, the PoA could cease when the boy reaches the age of 25. Even though the urge is strong, the assets cannot be liquidated and pulled down. The costs of property maintenance and upkeep will be kept to a minimum. There would be no transactions or favours to known parties in terms of renting the residence or managing investments. No loans would be provided to anyone with the assets that they have.

The fifth point to consider is the need of maintaining secrecy. Others, except the young man’s immediate relatives, do not need to know how much he is worth due to his inheritance. His surprising windfall resulted from incredibly unfortunate circumstances, and the young man is still working to develop the skills necessary to become financially self-sufficient. It will be beneficial not to let too many people, especially well-wishers, know, meddle, or provide advice about the boy’s funds. This agreement is based on the assumption that the youngster and his uncle are in good health.

Sixth, it is critical to monitor and evaluate assets and their performance regularly. Especially because the uncle is a competent businessman, it’s critical to choose the best financial counsel after conducting thorough research. After then, the ability to review, ask questions, and seek clarifications will keep the situation under control. Working with great care and regard for another person’s money is required in this case. Setting goals and targets, carefully selecting items, and closely monitoring assets are all critical tasks that must be completed professionally, competently, and accountable. The assets belong to the young man, who is the rightful owner. He might not appreciate being patronized. It’s crucial to ensure that he agrees with the arrangements being made and trusts the process and the persons involved. Any behaviour that jeopardizes confidence might cause things to escalate and lead to hasty conclusions. My friend’s responsibilities are enormous.

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