Financial Thoughts
What Happens When My Parents Pass On?
This a topic that most of us choose not to talk about. To be fair, who wants to discuss something that is going to affect you emotionally. Who is, in fact, ready for when that day arrives, where your own parents are no longer around?
It is something that is bound to happen no matter how old you are, whether you are just finishing school or already mid-career, it can happen at any time.
The expenses that will be involved in the first few days
There will be the expenses that will be incurred during the funeral plus any cost related to settling the burial of your loved ones. From $5,000 to $20,000, that will depend on your family.
This is just to give you a heads up about the cost that might be involved. Some might even be surprised at the amount of money involved. It is not your fault as it is something that you will go through often but nevertheless, it is good that you are aware of it.
Distribution of estate
Thereafter, there will be a discussion amongst the family about how the inheritance will be distributed. Where there is a valid and binding will drafted prior to death, the division is less complex. For those parents who have already drafted a will, you would have to wait for the executor to do their job in ensuring the distribution of assets is done in accordance with the intent of the deceased.
Passing on without a will
However, the problem arises where there is no valid and binding will drafted prior to death. The question is what will happen when the parents didn’t draft out a will? How will the estate be distributed?
If there is no will, the distribution of estate will follow the Intestate Succession Act, where the distribution will specifically follow the allocated portions that have been decided.
By way of a brief summary, where the deceased has left behind a surviving spouse but has no children and no surviving parents, the spouse shall be entitled to the whole of the estate.
Where the deceased has left behind a surviving spouse and children, the spouse shall be entitled to ½ of the estate.
Where the deceased has left behind children but has no surviving spouse or surviving parent, the children shall be entitled to the estate in equal proportions. If a child has passed away too, then the grandchildren can legally represent him/ her to claim their parents’ portion of the estate;
Where the deceased has left behind a surviving spouse and surviving parent(s) but has no children, the spouse shall be entitled to ½ of the estate and the parent(s) to the other ½.
Please seek the necessary legal advice to be certain of what is the relevant distribution with respect to your own family structure. Please note that this article only applies to a non-Muslim estate. For Muslim estates, please see here link.
There may be dissatisfaction on the distribution of the estate, as some deem it to be unfair. That does happen in real life and it could cause arguments between family members. Accordingly, it would be in your interest to ensure that any division of assets have been contemplated prior to death and set out in a valid and binding will to avoid any future complications.
The Executor and Administrator
There are two important people when it comes to the distribution of the estate. The Executor and the Administrator.
Who are they? They are the ones who are appointed to distribute the estate accordingly. They are the ones who are in charge of all the money that was left behind and has the duty to distribute the estate accordingly.
Therefore the Executor and the Administrator must be someone trustworthy. The difference here is that an Executor is one appointed under a will, while an Administrator is one appointed by an application made to Court in the absence of a will and any appointment during the lifetime of the deceased.
There are a lot of undistributed estates due to the dissatisfaction in whoever was appointed to be the Administrator. In some cases, the children are uninitiated and unfortunately are not on talking terms, therefore the estate will not be distributed for quite some time and even forever.
No matter the amount of estate that has been left behind, any amount of money will be useful in chipping into your current personal or family expenses.
Things to be done
In conclusion, before that day comes, as a family, take the necessary steps so that the only hardship that will be faced is only the emotional loss and nothing else.
In some cases, most family members have no idea of what kind of insurance policies that the parents may have. Therefore there are a lot of unclaimed insurance policies.
Do take the first step in asking your parents of any insurance policies that they have. You yourself are able to claim the death benefit from respective insurers. With that insurance payout, it can help out in attending any immediate matters, such as any mortgage loan repayments or hospital bills that are due.
Ask if your parents have indeed drafted a will. Encourage them to take action even it is uncomfortable at first. Even between family members, we are indeed sensitive with anything that relates to money. But getting over the first hurdle will only make things easier from then on.
Drafting a will can help in settling any potential conflicts among families in the future. Clarity is always a key component when it comes to handling the distribution of the estate.
That’s the end of this article. Do share it if you think this is beneficial to your friends and family.
Disclaimer:
I am a financial adviser but I am not your financial adviser. Therefore, what is posted on this website, are my opinions and NOT to be taken as financial advice. Information provided might be relevant at this period of time but may be irrelevant due to alterations to rules, regulations or policies. The information provided is true to the best of my knowledge, but there maybe omissions, errors or mistakes.
