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Insights · 6 min read

Liquidity for Heirs: So Assets Need Not Be Sold in a Hurry

The role of life insurance, emergency funds and financial planning in giving heirs access to cash, plus the bank accounts and digital assets that are often forgotten.

The late Pak Darmawan (a pseudonym) left an estate that looked substantial on paper: two plots of land, a house and shares in the family business. Yet in the first weeks after his death, his wife struggled to pay the outstanding hospital bills, the household helper's wages and the car instalments. Accounts in his name could not be accessed until the heirs' documents were complete. A few months later, the family was forced to sell one of the plots below market value because it needed cash quickly, including to pay the Land and Building Acquisition Duty (BPHTB) on transferring the other assets into the heirs' names. (A fictional, anonymised illustration.)

This story illustrates a problem often overlooked in inheritance planning: a family can be "asset rich" but "cash poor". This article looks at why liquidity matters, the instruments that can help, and the assets that are often forgotten.

Why heirs often lack cash

After someone dies, there is a delay before the estate can actually be used by the heirs. That delay arises because of:

  • Administrative processes. Banks, land offices and other institutions require proof of death and proof of heirship before transferring or releasing assets.
  • Agreement among the heirs. Until the estate has been divided, decisions about shared assets usually require the consent of everyone entitled.
  • Obligations that keep running. The family's living costs, the deceased's debts, administration costs, and taxes and duties such as BPHTB still have to be paid.

When the need for cash arrives sooner than the process is completed, families are pushed into selling assets at the wrong time. For a family business, a lack of liquidity can even force the sale of shares to outsiders.

The role of life insurance

Life insurance is one of the instruments most often used to provide liquidity on inheritance. Several of its features are relevant:

  • Funds are available relatively quickly. Claims are paid to the beneficiary named in the policy, in accordance with the policy terms and the insurer's claims process.
  • Not subject to income tax (PPh) for the recipient. The Income Tax Law (UU PPh) excludes from taxable objects payments from an insurance company to an individual in connection with life insurance, health insurance, accident insurance, endowment insurance and scholarship insurance.
  • Can be designed for specific needs. For example, covering the family's living costs for several years, paying off debts, funding the children's education, or providing funds so that one heir can buy out another heir's shares in the family business.

A few points need attention. First, the beneficiary designation must be updated when family circumstances change, for example through marriage, divorce or the birth of a child. Second, the position of the sum insured under inheritance law, including its relationship with the heirs' reserved portion (bagian mutlak), should be discussed with a legal adviser. Third, choose a product that fits the purpose; investment-linked products have different features and risks from pure life insurance. Make sure the insurer is licensed and supervised by the Financial Services Authority (OJK).

Emergency funds and family accounts

Besides insurance, cash reserves that the family can easily access are a great help during the transition. Some practices to consider:

  • An emergency fund in the name of a spouse or another family member, not only in the name of the head of the family, so that it is not held up while the inheritance process runs.
  • A joint account (rekening bersama) can be an option, but the rules for withdrawals when one of the holders dies differ from bank to bank. Make sure you understand the terms.
  • Separating business funds from personal funds, so that the family business does not grind to a halt when the owner's personal accounts are frozen.

The size of the emergency fund depends on the family's monthly needs and the expected length of the inheritance administration. A financial planner can help work out a realistic figure.

Comprehensive financial planning

Inheritance liquidity should ideally be calculated, not guessed. The usual steps are:

  1. Make an inventory of assets and liabilities, including debts, instalments and personal guarantees for business debts.
  2. Estimate the costs of settling the inheritance, such as BPHTB, notary and land deed official (PPAT) fees, and other administrative costs.
  3. The family's living needs during the transition period.
  4. Identify the gap between the cash available and those needs.
  5. Choose instruments to close the gap, such as life insurance, an emergency fund or restructuring of assets.

Assets that are often forgotten

A good deal of wealth goes "missing" not because it was stolen, but because the heirs did not know it existed.

Inactive bank accounts. An account that has had no transactions for a long time may be classed as dormant under the bank's policy. In 2025, the Financial Transaction Reports and Analysis Centre (PPATK) temporarily suspended transactions on a large number of dormant accounts as a measure to prevent money laundering. PPATK stressed that the funds in those accounts remained safe, and said the measure also served as a notice to account holders or their heirs. For families, the lesson is clear: record every account, including those rarely used, and understand the bank's procedure for transfer to heirs.

Digital assets. These include online investment accounts, e-wallets, crypto-assets, balances on payment platforms, and even accounts that store family documents and photos. Since 10 January 2025, the regulation and supervision of crypto-assets has moved from Bappebti to OJK. However, crypto-assets held in a private wallet whose access keys the family does not know are, in practice, unrecoverable.

Other items. Old insurance policies, deposits at small banks, pension funds, personal receivables, and shares held through securities companies.

The simple solution is a regularly updated list of assets, kept in a safe place, setting out what the assets are, where they are recorded and who needs to be contacted. Do not write passwords down openly. Instead, discuss with your adviser a secure way to make sure access can be passed on when needed.

Key points

  • A family can be rich in assets yet short of cash in the early period after the deceased's death.
  • Life insurance can provide funds relatively quickly to the beneficiary, and payments to individuals are not a taxable object for PPh.
  • An emergency fund should not be only in the name of the head of the family.
  • Calculate liquidity needs: living costs, debts, BPHTB and administration costs.
  • Record dormant accounts and digital assets; assets nobody knows about risk never reaching the heirs.

To work out your family's liquidity needs in a measured way, start with Parampara's Inventory of Assets and Liabilities service: a comprehensive, systematic and easy-to-understand list forms the basis of the calculation.

This article is general information and not legal, tax or financial advice, nor a recommendation of any particular insurance or investment product. Please consult a qualified professional.

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