Why is estate planning crucial for young parents? And even for parents with grown-up kids? Life is unpredictable; no one knows when they will die and that it is important to pay attention to estate planning in Singapore. Estate planning protects a person’s beneficiaries from bad intentions and makes sure that they are well provided for after you die.
Doing estate planning in Singapore also secures hard earned and inherited assets from being squandered, paid to creditors and going into the wrong hands. For young parents who have minors depending on them, making a solid plan for the unknown future prevents their children from experiencing hardships. Orphaned children suffer the worst in the world if they are left with no financial report and well-meaning guardians.
Creating an estate plan solves the following fears for young parents:
- Young kids being left with no one to care for them
- All their hard work is placed in the wrong hands
- Creditors, mortgages and the bank taking all assets leaving nothing to their kids
- Children end up wasting their inheritance on activities like gambling, partying and worst drugs
Benefits of Estate Planning
1. Being able to choose a suitable guardian for minors
When a spouse dies, child custody or custody of minors immediately passes to the remaining spouse. But, in the case of both parents dying, who will be left to care for the children. Not, all young couples have good relations with relatives. And, not all relatives take great care of orphaned children. Unicef states that more than 150 million orphaned children become abuse and suffer violence in the care of others. The worst thing that could happen to orphaned children is to be sent to foster care.
The said scenario must be avoided at all cost, it’s worst enough that children lose their parents but to experience abuse because of bad guardians. Creating an estate plan prevents these things from happening. Young parents can designate their preferred guardian for their child should they die a premature death. By being particular about the person who will be their young children’s guardian they can ensure their children’s safety. Here are some guidelines to consider in choosing a guardian:
- Same family values and beliefs
- Good financial standing
- In good health
- Trustworthy and caring personality
- Clean record
- Has a close relationship with children
- Lives in the same neighborhood
There are times when a family friend or a godparent can provide a better choice for young parents than their own relatives. All that’s important is to choose a person who will care and treat these children like their own.
2. Money in the Right Hands
If the parents die and leave a minor child on their own, the court will appoint someone to be the child’s guardian. Since minors are not allowed to manage financial affairs left by their parents, which means appointed guardian will be the one responsible for managing the assets of the deceased.
By then, the minor’s future depends on how the appointed guardian manages the assets left by the deceased parents. If the legal guardian has an interest over the assets left behind, the possibility of the minor not getting the benefits their parent has left behind is high.
So to prevent this from happening, the couple can choose a trust company and create a trust for their assets. Through making a trust, they can ensure that their cash, real estate, proceeds of life insurance, and investments are effectively and efficiently managed over the years. This is to ensure that the benefactor’s education, health, and needs are given without the court interfering. And that their needs are sufficiently met and provided for.
3. Protection From Creditors
Creating a bulletproof estate plan will protect valuable assets from creditors. Estate planning has devices, based on the law that prevents other parties aside from the designated beneficiaries from getting money. Inheritance meant for children which if placed in a Will can be subject to probate court, but putting it in a trust protects it. Trust Companies can also invest the money in stocks allowing it to grow and accumulate wealth.
The appointed estate executor will also see to it that debts and other payables are paid. The deceased will not worry about mortgages and other payables not being paid by their relatives or chosen beneficiaries. Instances where the mortgage is not settled and debts accumulate are common for couples who fail to select a responsible estate executor. And this flaw is not limited to just paying off debts as well. An irresponsible estate executor can squander away in illegal means whatever estate a young couple may leave behind.
Creating a well-planned estate plan limits the chances of choosing a wrong estate executor. The good thing is estate planning in Singapore boasts of credible.
4. Prevents Kids From Squandering Their Inheritance
If inheritance is given outright to a child by the time they reach 18, chances are the money will be used up within a few years. Young teens and even young adults can be tempted and even lured into doing drugs and gambling. Bad influences that manipulate the young beneficiary can lead to them using up their inheritance over useless whims.
According to MarketWatch one in three persons blow away their inheritance. And 70% of second-generation kids squander away the family fortune. Putting up a trust will prevent kids from wasting the money their parents gave them. A trust can be arranged with conditions like milestones in life before they can receive money from the trust. A trust is a sure way to prevent children with drug dependencies or gambling issues from taking their inheritance and wasting it in Vegas. If the child fails to achieve the logical conditions set by the parents.
Here are possible conditions that young parents can put in a Trust:
- Finish high school
- Go to a prestigious college
- Earn a degree
- Get married
The list can be anything that young couples can think of, so long as it is logical. And these conditions have a monetary equivalent, once the child has achieved the condition set then he or she will be given a part of the inheritance.
For young couples who want to ensure their child’s future, estate planning is a not a mere luxe. It is a need that should be realised if they’re going to protect their child’s future. The good news is that estate planning in Singapore can help realise that need for them.