The Importance Of Your Next Of Kin Knowing About Your Wealth And Investments

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As you traverse the journey that is life, it is important to accumulate some wealth and/ or get several investment instruments to work for you. Depending on your financial muscle and backgrounds, different people will accumulate wealth differently: Some property (a piece/ plot of land or real estate) here; some stocks/ shares (in listed or private companies) there; some T-bills or bonds (Government and Corporate) here etc. In addition, one could have insurance products such as life or term insurance policies or even savings in bank accounts. The question becomes, should your next of kin/ spouse know about all your investments or not?

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While there may be cons and pros of either side, I would say the pros of your next of kin knowing about your investments outweigh them not knowing. Think of the traditional setting in our great-grandparent’s era. The family (or sometimes community as some assets were communally owned) knew exactly what it owned. How much livestock it had, how much land it had, how many chickens it had etc. There has to be something that happened that made us start hiding wealth.

There have been a few incidences where someone has killed (or paid people to kill) their spouse so as to inherit the wealth that the spouse has. Likewise, there have been cases of insurance fraud where the beneficiary, knowing that they stand to be paid millions upon the death of the policyholder, kill him/ her so as to benefit. Some of these cases, however, come to light when insurance companies do their investigations before paying any claim. These two have been the main reasons why people have been reluctant to share their wealth with their next of kin or spouses.

Flipping the coin, what happens when you pass away and no one knows about your wealth and your family is left to suffer when they could have lived a decent comfortable life? Your hard work in acquiring assets will be for nothing as the assets will remain unclaimed and unutilized. Moreover, is it not kind of unfair to your family if, for example, your income is Kshs. 1,000,000 a year and you use say 30% to acquire assets which they will never use in the event you die? Essentially, your family is living off Kshs. 700,000 a year when they could as well be living off the Kshs. 1 million since they will never see the fruits of the Kshs. 300,000 that’s going into acquiring assets.

In addition, life insurance (as most insurance claims) has to be claimed by a policy document, meaning, even if you intended your family to benefit from it, if they do not have the policy document, they may not be paid. Luckily, nowadays, the policy documents are electronic, but a few years ago, they were physical and this made a lot of policies go unclaimed as the policyholders had hidden the documents and/ or the beneficiaries had no clue

Income from other assets or investments such as rental income, coupons/ interest from bonds, dividends from shares and money in hidden bank accounts will be lost or be taken up by the Unclaimed Financial Assets Authority, thereby benefiting no one. Trying to claim back these assets, especially if you have no proof such as land title deeds or no idea of their existence in some cases, is difficult.

There are people who choose to tell their friends or extended family members of their wealth and assets and not their spouses. In the event of death, the wealth can be taken by the extended family or even the friends, since they are the ones who know the whereabouts of the assets. This leaves their children with close to nothing. The repercussions of leaving your nuclear family with nothing when your assets are somewhere unclaimed or with people who do not have the best interest for your nuclear family are huge.

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To begin with, there may be prolonged court cases as your spouse tries to get back the wealth. This will not only not enable your family to use the wealth, but also have part of the assets sold off to pay lawyers. A protracted court case, which at the end will determine which party gets the assets can create enmity or conflict between your spouse and the people who you told about the wealth. These are basically the people who you thought would have your nuclear family’s back in case something happens to you. Unfortunately, some of these people may be your children’s grandparents, uncles or aunts.

Secondly, your spouse learning you had other assets that you did not tell them about, but instead, you told other people can make them have some resentment towards you. This can be even worse if those you told about the wealth decide to keep the wealth for themselves. When your children grow up and come to learn they could have had a better life had you not hidden your wealth, especially after seeing the people who benefited from your wealth, they will probably not remember you fondly.

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Finally, hiding your wealth means your children may probably not get the education they would have got had they got access to the hidden wealth. Without a good education, children will almost be handicapped compared to their peers with a better education. This means that you will set back a generation as the children will start life and their families at a point of disadvantage when the hidden wealth would have given them an advantage in life.

It is therefore important to have your spouse know about your investments and wealth. It is even better to have the assets jointly so that in case anything happens to anyone, the assets cannot be taken by other people you did not intend to benefit. Alternatively, draw up a will that will be used in case of your passing. Write A Will – Why You Should Do It Now

Here are articles on Planning Succession In Family Businesses and Tips On Running A Successful Family Business

Check out this other articles on savings and investments – Saving or investing, which way to go? and Personal Finance: How To Get yourself Organized. Be careful about where you get financial advice so that you don’t lose your money – Be Careful Where You Get Your Financial Information – There Is A Lot Of Fool’s Gold Out There.

Also, check out this article on Money Saving Tips to Survive A Loss Or Reduction of Income

If you are not sure where to start your financial journey check out the articles below.

How to create a Financial Plan

7 Common Financial Mistakes & How To Avoid Them

Finances: 7 Reasons Why You Need To Manage Your Money 

Finances: 8 Reasons Why You Need To Do A Lifestyle Audit On Yourself

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I am a former investment Analyst who has recently ventured into the business world as a young entrepreneur. In my free time, I use the pen as a sword to shape the world so I can feel how awesome it would have been if I were a writer.