Parents with elderly parents

Parents with elderly parents

 

Estate Planning Implications and potential problems

  1. If you die without a will, under Section 7 of the Intestate Succession Act, your parents will be totally excluded from your estate. Your spouse will be entitled to 50% of your estate, and your children will be entitled to the other 50% of your estate. If they are minor, their share could be managed by the surviving spouse or guardian until they turn 21. Your elderly parents will be legally entitled to nothing.
  2. As you have minor children, your estate will need 2 administrators to co-administer the estate. Usually, the surviving spouse will be one, and the other will be one of your surviving parents. This can be problematic as your elderly parent will be required to discharge the co-administrator duties, but he/she is not legally entitled to any assets in your estate.
  3. Assuming your parents live on your allowance every month, your unplanned death could effectively end this source of income to your parents.
  4. The situation could be worse if one of your parents passes away, leaving the surviving elderly parent in a financially challenging situation if no provision is made for him/her.
  5. If your surviving spouse re-marries, the situation may be difficult for your elderly parents as your spouse has his/her new family to take care of.

 

Estate Planning Solutions

  1. You need to provide some capital for your elderly parents to live on.
  2. You should update your will, CPF and insurance nominations to include your elderly parents. If your elderly parents should pass away before you, you can then review the estate plans and re-designate the assets back to your immediate family.
  3. You should provide adequate capital to fund your parents’ medical insurance plans.
  4. Never assume that your parents can rely on your surviving siblings to live on when you are not around.
  5. If your spouse’s relationship with your parents is not good, consider using insurance nomination or assignment of life policies to transfer part of your wealth to your elderly parents outside the will.
  6. You should leave instructions for your executor about who will inherit the ownerships of the juvenile life policies.
  7. If your parents have health problems or lack the mental capacity to manage money, consider setting up a trust to distribute money to them periodically.

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