Comprehensive estate planning for parents with young children

I have many friends with young children lamenting about their daily lives that mainly revolve around and dictated by the needs of their young children. Both parents have to take turn caring for their children, sending them to clinic when they fall sick, being their Grab drivers toand from school, sending them to tuitions and so on.

With the Restricted Movement Control Order in place until August 31, 2020, the routines of families are beginning to get busy again as schools reopen in phases. Lately some of these parents have asked me what it takes to process will and estate planning to protect the family and their young children.

For them, I will start my first step with a thorough review of their existing life insurance nominations. In some cases, their nominations are not properly done and not updated.

For example, one of the life policies purchased before marriage still have his parents as nominees. Another recent life insurance policy has both trust and non-trust nominations, naming his sister, wife and new born child as nominees.

Note that the pay out of policy death benefits is now governed by the new Financial Services Act 2013’s Schedule 10. As I have elaborated in my previous article, complications will arise in the event that both parents die together or within 12 months of each other. Thus, it is crucial to cover your estate plan for all possible scenarios.

Comprehensive will planning When it comec to step 2, it is time to work on their will planning. Having a valid will with clear instructions is crucial for parents with young children.

When you are for planning your will, the choice of your executor (and substitute executor) is of utmost importance. He or she will be the representative of your estate, signing on your behalf when you are no longer around in this physical world.

On top of that, you need to spell out sufficiently clear instructions to your appointed executor on how to ensure that your young children are being provided for, educated and taken care of financially in the event of your untimely demise.

Things get complicated if and when your spouse also perish in the same disaster, leaving young children to fend for themselves. All your bank accounts will be frozen, and your life insurance nominations will also fail. Thus a comprehensive will planning is needed to cover such eventuality in your will and your wife’s will.

Appointment of guardian Who you appoint as the guardian (and substitute guardian) for your young children is also something crucial we will advise if both parents die unexpectedly. I have seen written wills without the appointment of guardians for minor children even though they have young children below the age of 18. It is also important both husband and wife’s wills appoint the same set of guardians for their minor children.

In step 3 of my comprehensive estate planning for parents with young children, we will emphasise the importance of ensuring that the welfare and future of your young children are fully protected to cover both events of whether one or both parents perish together.

While the young children may be taken care by the appointed guardian, will you feel comfortable that your guardian also handle all your moneys earmarked for your children?

Or do you prefer another trusted person or party to hold all your money and properties on trust for the benefits of your under-aged children?

Who else will be entrusted to dispense the money and to determine how much is sufficient to cover the monthly expenses of your children’s daily living and education expenses, until they graduate from university?

Estate planning for business owners

For those who are running a business, there will be an additional level of complexity. In step 4, we will advise our clients how best for business owners with young children to ensure that their business can survive them. Who will take over and continue running their business if he predeceases his wife and young children. How else to plan if his wife is not capable of continuing his business?

What if he is running a family business that does not want his wife to get involved? What will happen to the business and shareholdings of the sdn bhd if both him and wife were to die together or in a short span of time leaving all the young children behind?

On top of that, how and who will settle all the outstanding liabilities under his personal name and those under his company? If the company were to run into financial difficulties after the business owner’s death, the company’s creditors will go after his estate since he is the personal guarantor for all his company loans and liabilities!

These are all tough questions that business owners must confront and need to plan for in their business estate planning. Will a simple written will cover all these eventuality?

Thus a business owner with minor children needs a comprehensive approach in planning for your will and estate. Professional consultation is needed to ensure that your estate is well protected and preserved for your young beneficiaries and their future.

For your will and business estate planning appointment, please contact Lee Khee Chuan ChFC, CLU, FLMI, B.A.(NUS) at 016-888 0138 (Whatsapp). Lee is a licensed financial adviser representative (CMSRL license holder) with Areca Capital, a senior franchisee of Rockwills and Islamic estate planner with As-Salihin Trustee Bhd.