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Giving your children inheritance when they are still young?

Although life expectancy is getting higher, there have been many unforeseen circumstances happening in these decades, such as the mysterious disappearance of MH370, traffic accidents and many others. The loved ones are left behind, emotionally stranded and sometimes, financially stranded.

Imagine, a husband and father of a family of 5, meets with a traffic accident and passes on. What happens next? With a Will, his estate will be distributed according to his wishes. Without a Will, the estate of the husband will be distributed according to intestate act, which will distribute 50% to his wife and 50% share to his children equally. If the child is under 18, the assets will be held under public trustee till he or she reaches 18 years old.



Question 1: Would an 18 year old be financially able to inherit a sum of money?

Typically, an individual will have a total of $100,000 in the CPF Account. At the age of 18, your child can inherit your CPF monies. Do you think he or she can manage your $100,000? Would there be any chance of misuse?

We have seen many cases of young men and women, who upon receiving the CPF monies as inheritance, spent the lump sum within months! With proper planning, you can do a delayed distribution of your CPF monies to your children.



Question 2: Would you want your private property to be a burden to your children?

Your achievement in purchasing a private property is remarkable. However, when you are no longer around, without a Will, your children stand a chance to own your property. Is there a problem here? Think about it, at the age of 21, he or she and siblings will inherit the property. Together with the siblings, they are stranded with the ownership. Why do we say that?

If they are going to get married and purchase a HDB flat, they cannot do so as they are part of an ownership of the private property. If they plan to buy private property, they are going to incur additional buyer stamp duty fees (ABSD) because they own a private property.

Without proper planning, your property may be a burden to your children when they grow old.



Question 3: What happens to your HDB flat when both you and your spouse pass away?

There have been cases when both parents pass away, leaving the children behind. First, without a Will, no legal guardian is appointed. Next, the assets are frozen. The immovable assets, HDB flat, will be passed to the children. However, they are still minors. So, what happens to the HDB unit? Sell it away? In such cases, someone related to the children must step forward to be the trustee to temporarily hold the HDB unit for the children until they reach legal age. This sounds legitimate right?

The question is, do you trust the person that is appointed? Is he or she the person you would want to manage your assets?

With proper estate planning, many issues can be prevented and your loved ones will benefit from your inheritance.



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