As parents, our lives have changed a lot since we had kids. The well-being of our children is our primary concern in every decision we make, and we always want to protect them, but many people tend to overlook the part of writing a will.
It’s certainly not easy to think about our deaths at such a joyous time. However, once we have children who depend on us, having a will becomes one of the most important things we can do to protect them and safeguard their future financially.
Why Parents Should Have a Will?
01.
Decide How You Want to Distribute your Assets
If we pass on without leaving a valid Will, our assets will be distributed in accordance with the laws of Malaysia, namely the Distribution Act 1958 (As Amended in 1997) for West Malaysia and Sarawak. In other words, if we give up the right to write a will, we agree to give up the right to decide who will benefit from our hard-earned money. You can refer to the chart of distribution methods stipulated by law.
When I talk to my clients, I notice that some people still believe that their spouse will automatically inherit all their assets, even without a Will. I need to clarify this is a misunderstanding as all of our estates are frozen upon our passing (including our joint accounts/investments etc) and our estates do not automatically transfer. Our family can go through a complex and lengthy legal process that can take 2-5 years. How can you keep your loved one waiting so long?
02.
Appoint a Trusted Person for your Child’s Inheritance
Minors under the age of 18 cannot yet legally inherit our assets. They need someone to hold our money, property, investments, EPF, or insurance money for them. This special person will be called the Trustee. Therefore, the rights of our minor children will be held in the name of the Trustee who manages the finances on behalf of the children. So, don’t we have to appoint someone who is experienced, professional and trustworthy as trustee of our Will?
You can use your Will to appoint the person you trusted most as your Trustee. This is critical because the Trustee will monitor the assets and use the money to pay your child’s living expenses, tuition fees, medical bills, etc. until they turns 18 or an age you specify. If our children are over this age when we die, the trust will never be established and the property will go directly to the beneficiaries.
If you need someone to guide you on how to choose the right Trustee, feel free to drop me a message. As a parent, I know exactly what is bothering us and we want the best for our children.
03.
Choose the Right Legal Guardian for your Child
Another compelling reason to have a Will for family is to be able to appoint guardians for our children in the event of our death. If our spouse survives behind us, we can expect that our spouse will automatically be the guardian of our children. However, if both parents die or the sole custodial parent dies, the guardian named in the Will becomes the child’s legal guardian. If you are a single parent or widow, the need to appoint a guardian for your children is especially urgent and obvious.
Every parent should have their own Will. When you make a Will for yourself, remember to make sure your child’s guardian is named in your Will. A guardian is an important person for your child in your absence. This will be the person or family that lives with our children and makes all the major and minor decisions we will make when raising our children.
If you did not name a guardian in your Will, anyone interested can apply for the position. The court must then decide the best person to raise your child without considering your opinion. Without proper planning, your children may end up growing up with relatives you don’t like because of their values, lifestyle, and other reasons. Hence, remember to use this powerful tool, a Will to protect your child’s future.
04.
Delay Inheritance
In Malaysia, minor children can legally hold property when they reach the age of 18. According to most of my clients, it may be premature for their children to inherit assets at such a young age. Without proper estate planning, our children could deplete our estate in a short period of time. To prevent this, some parents may want to set up a Family Trust. This gives you control over how and when your assets are given to your child. For example, you can choose to release funds at a later age, such as 25, or release them in stages, such as 50% at age 22, balance at age 25. This may prevent our hard-earned money from being squandered.
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Keep in mind that a Will alone may not provide enough planning to meet your and your family’s needs. In some cases, no matter how well-drafted your Will is, it’s important to know whether the assets you leave behind are sufficient to care for and support your loved ones until they become financially independent. As a licensed financial planner, in order to add value to my clients, I provide them with complimentary calculations to ensure their estate plans are secure for their children’s financial future.
If you would like to discuss your estate planning with me, you can book yourself a short 30-minute free consultation session by filling in your contact details in the “Request A Consultation” box to learn how we can work together to address this issue.
03.
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04.
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Conclusion
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