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Welcome to Kairos!
Kairos is a personal finance podcast created by ithoughtplan in this podcast we talk about personal finance and financial planning concepts. We covered a wide range of topics which include savings, budgeting, risk management, loans and mortgages investments, financial goals, retirement planning, tax, and estate planning if you would like to listen about spending, saving, protecting and investing your money do tune in to our podcast every month.
Jaya: Hello all this is Jayalakshmi welcome back to Kairos the spirit of the podcast is to talk about doing the right thing at the right time for personal finance. We have Srimathi here joining us on our episode today. Hi Srimathi
Srimathi: Hi Jaya! thanks for inviting me to the podcast today.
Jaya: It’s my pleasure Srimathi, so it’s very common for parents to worry about their children’s future right but when your child has disabilities or special health care needs it’s normal to have those additional concerns like what the child might go through in your absence and who will manage the needs in the future. Questions like these might keep parents up at night. I have personally known a family friend who underwent a similar situation but thankfully they had good financial and family support and they have planned for it and I know you have worked with parents with special needs children and I understand estate planning plays an important role here. First things first so can you brief me on estate planning.
Srimathi: Yes, I have worked with clients who are parents of differently-abled kids. I will also quote an example here as we go along this podcast but let me explain you about estate planning before we begin.
Although the term sounds kind of complicated right it simply means planning what will happen with your assets once you’re gone. This is very important in case of parents with a special needs child because the thought and the worry is all the more a normal than a normal child and estate is your total network according to the state and the central government. It includes your bank accounts home car or any other assets you may have to our name typically people work with estate planning experts to help them figure out how to distribute these assets without encountering any legal difficulties while keeping as much money as possible in the family.
When you die you must decide where all these assets will go. Typically parents will leave much of the asset to their children though it may also decide to leave a part of estate to our friends, niece’s, nephew’s or even charitable organisations. I can also take you through some important steps of estate planning which needs to be considered in such cases.
Jaya: Thank you Srimathi for putting it in simple words I think it makes so much sense to have a plan in place on how you wish to pass these assets to someone. So can you take us through your experience on planning for them.
Srimathi: Yes, like I was mentioning there was a client of mine called Thanuj, he approached us for financial planning for his family and his son Rahul. Ragul was 17 years old and his requirements were different from my usual plan and a usual kid. He was just about to finish schooling and start his college education Thanuj wanted us to help him with a full-fledged plan for himself and Rahul’s future corpus and estate planning. Financial planning for a child with special needs is very different, the family must plan for the lifetime care of to child within their lifetime and how to plan after them as well.
Jaya: I completely agree, so can you tell us more on what kind of questions they had in their mind and what were their requirements in this case.
Srimathi: Yes certainly Thanuj had a couple of questions in mind and through the plan, we had the opportunity to answer them in a structured way.
First questions were Where would Rahul live post-Thanuj’s lifetime, who will manage his money and other needs, should they appoint a guardian who will inherit Thanuj’s assets, is he covered enough in terms of life and health insurance.
Jaya: Interesting I think these are for short challenging questions and definitely require a well thought professional advice.
Srimathi: That’s right Jaya! It’s definitely a challenging exercise when to you compare it with a normal plan the regular goals for a kid. Financial planning is not only about just the math or quantitative aspects but it also consists of qualitative aspects like these where you understand the client’s needs, where you customize the plan based on the client’s requirements. However, in this case we suggested him certain ways to plan the estate and inheritance further process were taken care by his lawyer.
Jaya: Great so I understand each case is different but could you take us through the important aspects that one needs to consider.
Srimathi: First things first where will Rahul stay? Planning for a residential house or a retirement home kind of set-up is crucial. Understanding the need to consider a home where Ragul can reside post their life and who will take care of him should be addressed first. There are many options today like residential living homes where Ragul can fit in quite well, again it depends on case to case.
Jaya: I understand, so it’s nice to know that our society is inclusive but do we need a guardian to take care of the child even after he becomes major? What are your thoughts on this?
Srimathi: Brilliant question Jaya! Yes if the case insists so even after turning as an adult Rahul might need a guardian to take care of him for his day-to-day activities. Appointing a guardian to take care of Ragul was Thanuj’s priority as well in this case considering the comfort zone of Rahul with the guardian is crucial as well. Creation of a trust is also a good idea. A private trust can provide an effective solution to this issue with the trust Rahul doesn’t have to depend on an individual, friends, relatives, or even professionals can be appointed as trustees.
Jaya: Well that’s great can the parents be the trustees? Can you brief on how this works?
Srimathi: Yes the most important feature of this tool is that it continues Rahul’s finance needs till his lifetime. Thanuj can become initial trustee and understand how the trust will manage the financial affairs of Ragul. One of the solutions recommended to Thanuj was to have both parents as beneficiaries in the same trust for their old-age care as well.
Jaya: Great that was sure informative are there any other aspects to be considered here. Looks like we have covered all the important points.
Srimathi: Yes, the last thing the creation of a will. This is something we need to focus on the nomination as you may know doesn’t necessarily entail legal transfer. Hence will is an important step to ensure distribution of wealth in an appropriate manner.
Jaya: That’s true, I think will also gives clarity on who will inherit the assets and in what manner?
Srimathi: Yes, that’s correct
Jaya: Great talking in detail about this.
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