Sharath, an Ivy League software professional, is well-settled in the US for over 25 years now. He is a Vice-President in a multinational company and holds a US passport. He has two sons; both are studying in college. His wife takes an active participation in a local Indian community.
They have a high-profile lifestyle, and a busy schedule. They run two mortgages and have little savings. Sharath had gone to the US for higher studies and has stayed there ever since.
Back in India, Sharath’s father owns multiple properties, manages the rental income and the property’s maintenance. But it is getting increasingly difficult, with old age catching up with his father, and Sharath has been thinking of consolidating the assets in India.
He hardly gets time to visit India and most of the communications happen online.
Our existing client referred him to us, and a discussion ensued. After the initial profile discussion, during the start of the conversation, it seemed as though he had everything in control with the way things were progressing in his life. However, a little while later, he found himself getting anxious on multiple counts. And they all seemed serious matters to him.
The following were the factors we discussed.
OCI Card: Sharath had not thought about this, as he had not visited India from the time he got his US Passport. It did not occur to him that he could apply for an OCI (overseas citizen of India) card; the benefits and necessities of being categorised as a Non-Resident Indian. We highlighted the advantages of getting the OCI card and assisted him with the operational formalities.
Bank Accounts in India: Sharath had no other accounts in India apart from a joint one with his father, with status as residential, and which he had not used ever since he left India. He did not see the urgency for consolidating matters and taking an account of things; he had been clueless about the banking set-up in India and the types of accounts he could operate. During the discussion, we clarified the benefits and transaction options under NRE/NRO accounts, underlining the risk of FEMA violation in continuing with the existing arrangement.
Consolidation of Assets in India: Over the years, his father had amassed several properties. Sharath never gave any attention to their whereabouts, nor did he have any details on the agreements or ownership papers of those properties. While reviewing his assets in India, we helped him identify how important it was to be well informed about the details and organise all paperwork.
Property Management service: On several occasions during the discussions with his father about dealing with the tenants and managing the property, Sharath felt overwhelmed with the innumerable follow-ups required to get things done. This made him wonder if there was any simpler way to get the management be done more professionally. Further to our discussion, we connected him to a property management service agency that could address his concerns.
Real Estate as Investment: Sharath was aware of the appreciation in the value of the properties. It was a significant portion of the family’s net worth, and he was dependent on these for his retirement. He was in a dilemma with the sale decision, what with the slowdown in property market. In the discussion that followed, we devised a financial plan for his income and expenses, which allowed him to evaluate the window to exit from the properties and assess the capital requirements for retirement, in a staggered manner.
Inheritance Planning: Being the only successor to his father, Sharath had been unaware of any further regulatory requirements for the transfer of assets upon his father’s passing. Things like succession certificate and probates were unknown to him. During our discussion, we gave shared details on the advantages of estate planning. He got interested, and we connected him to a legal counsel for the subsequent steps.
Reporting in the US for Inheritance: Having stayed in the US for such a long time, he had gotten used to income and capital gains tax reporting. Besides these, he did not give any attention to plan or educate himself on the reporting requirements, in the event he gets an inheritance from India. He was unaware of the tax liabilities as well. During our discussion, he sensed the need to consult with his tax expert on the matter.
In addition to the above points, we broadly discussed on the advantages of having financial assets in India for diversification, and the opportunity for making higher returns, after factoring the adverse currency movements, preparing for filing of taxes in India etc. The discussion gave important insights to Sharath and made him more informed in his decision-making process. In a cross-border situation, the awareness of having assistance made some significant difference to him.
(The writer is Managing Director and CEO of International Money Matters)The Great Diwali Discount!
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