Next of Kin: How it Works on Cowrywise

There have been a lot of questions about what happens to your savings and investments if death happens. In this article, you will learn about our improved wealth transfer system. This ensures your funds are appropriately transferred to your loved ones, in case death happens earlier than planned. This fits into one of our cardinal values: a transparent investment firm that puts investors first.

Just like birth, death is part of our life cycle. As with any other big life event, preparation for death and the loved ones you leave behind is important. But how do you prepare for this?

This is where the next of kin comes in, partly. While you can take the appropriate steps to write up a will, that isn’t where it ends. The holders of your financial assets must also be informed, especially when a will is not written.

Fintechs and Next of Kin Details

A few number of Nigerians have wills as most people culturally shy away from discussing death. Many financial institutions request your next of kin details when setting up an account. While in some cases this may be compulsory information to provide, in other cases it isn’t. This typically depends on the financial institution itself.

As technology evolves and many physical operations move online, we have seen cumbersome registration processes reduced to a few taps. What would normally encompass pages of handwritten information and days to confirm, is now done in minutes.

As great as this condensed process is, it has its gaps. One of which is the overlooking of certain essential details, like the next of kin. These details may not be requested when opening an account. However, they can be filled later on most fintech platforms.

Sadly, many customers never go back to their profiles to update this information. The reason varies and we can only speculate. It may be because customers do not understand the importance of next of kin information. On another thought, it may even be because they forget and are never prompted to make an update. Whatever the reasons may be, this gap is something we are deeply worried about and hope to bridge.

What is a Next of Kin?

To understand the importance of a next of kin, let’s explore what it means. According to Investopedia:

“Next of kin refers to a person’s closest living blood relative. The next-of-kin relationship is important in determining inheritance rights if a person dies without a will and has no spouse and/or children. The next of kin may also have responsibilities during and after their relative’s life. For example, the next of kin might need to take responsibility for their funeral/burial arrangements and financial affairs after their relative dies.”

It’s worth noting that the next of kin can be interpreted in a much broader sense by a country’s laws.

How does Next of Kin Work in Nigeria?

When you state your next of kin to a financial institution, your financial assets do not immediately go to the next of kin. It simply means that they are the first point of contact if you happen to pass. They are supposed to be the trusted person that you know will do the right thing and ensure all processes are done correctly.

It is also advised that you don’t use infant children as your next of kin. While they can be on the will, having them as next of kin can prove useless. A trusted adolescent or adult relative is better for easier contact upon demise.

An Example

A person owns two million Naira in a bank and is involved in a car accident. He sadly passed away and thus his bank account no longer has any financial activity at all. It means the financial institution is obliged to follow the system they have. One which is in line with the CBN Circular on dormant accounts.

The process

The bank will need to be contacted by a relative of the deceased person. After contact has been established, the bank will request a letter of administration and then proceed to restrict outflows. The funds in the account are then transferred to the estate of the deceased person.

However, that presents a slight dilemma. The bank has to be contacted by a relative of the deceased person to notify the bank of the passing of the owner of the account. This means if a bank is not contacted, the bank will be unaware of the passing of the owner. It will however just be assumed that the account is dormant. This is what qualifies as a dormant account, according to CBN:

“A bank account shall be classified as dormant if there has been no customer or depositor-initiated transaction in it for a period of one (1) year after the last customer or depositor-initiated transaction. When the account becomes dormant. the bank shall institute controls consistent with its precautionary policies, including surveillance procedures and second-level authorization.”

A lot of Nigerians believe that stating their spouse or family member as their next of kin means that ownership is automatically transferred to the next of kin should they pass. However, that isn’t the case. Rather, the next of kin is a contact point the bank or any financial institution can reach out to in the case of inactivity.

How Transfer of Assets Work

If the deceased left behind a will, this means the unclaimed funds in the bank account are shared based on what the will dictates. Therefore the next of kin, in this case, does not have any right to claim total or part ownership of the funds left in the bank account, except the will states that. 

What if there’s no will? When a person dies without a will, the question of inheritance can get complex. This debate is however settled by various aspects of Nigerian law. 

This means that the issue of inheritance is taken to court so that the customary law, Islamic law, English law or the Administration of Estates law can decide. In essence, the next of kin is significant in ensuring that assets don’t stay unclaimed upon demise. 

Sometimes, unclaimed dividends are not due to forgetfulness but because the owner has passed on. A properly registered asset with the next of kin properly identified will make claiming such dividends easier. 

Over ₦100 billion is held up in unclaimed dividends from the Nigerian capital market. 

Source: Nairametrics

How is Cowrywise helping with this?

Cowrywise as a wealth-tech, helps hundreds of thousands build wealth through simplified investments. That means we are responsible for the funds of many Nigerian families. Our team has taken a bold step towards ensuring that all our customers can rest assured that in cases of sudden demise, their funds will be rightfully handed over for transfer through a robust contact process.

We have created a fool-proof system that is in line with Nigerian law and also in the interest of our customers who entrust us with their funds. Here are the steps we are taking:

• Any Cowrywise account with a positive balance is classified as dormant if there is no customer-induced transaction on the account for more than 12 consecutive months.
• The account owner is automatically contacted via email and SMS to confirm their status.
• If no response is received in 30 days, the next of kin is automatically contacted via email and SMS. This is why your next of kin information should be up-to-date. Also, the person you choose as your next of kin should be someone you trust will do the right thing.
• Upon confirmation of the passing of a customer, we’ll confirm the presence of a will. If present, we’ll work with its guide. On the other hand, if absent, we’ll follow the further guidelines of the law for such situations.

As a Cowrywise customer, you can take simple steps today by adding your next of kin details to your account: 

1. Sign in here.
2. Tap “Next of Kin”.
3. Edit and save your edits. 

We also strongly recommend that you write a will and not shy away from it. Having a will is just as much a financial plan as having insurance and a pension.

Learn more about the importance of having a will.