|Tips on how to use the large government subsidy for Special Needs Trust|
|Written by Wilfred Ling|
|Tuesday, 09 July 2013|
It was announced on 14 June 2013 that Ministry of Social and Family Development have begun subsidizing the cost of setting up a trust with Special Needs Trust Company (SNTC). This is very good news especially for caregivers who cannot afford setting up trust with private trust companies. The following is a summary of the subsidy:
The following are some tips to parents who have children with special needs:
First, is it really necessary to have a trust setup for their special kids? There are kids who are of very high function and they may be able to take care of themselves. But there are also many who are unable to take care of themselves. Some will live like any other normal persons. In Singapore the life expectancy for a normal person is above 80 years old.
Second, if you would to pass away, how much money is required to support your dependent assuming normal life expectancy? Assuming a $2000 per month in expenditure over 50 years, it is $1.2m without taking into account of inflation and assuming zero return. Some people already have this amount – which is their property. Many Singaporeans are asset rich but cash poor. For those who really do not have this amount either in cash or property, they can make up the shortfall by buying a term insurance.
Third, setting up the trust with SNTC is the easy part afterall the trust deed is mostly standardized and their staff are so friendly. However, the part that requires some planning is on how to fund the trust. The following are three main ways to fund the trust:
Fourth, if you have other grown up children, you may not want to transfer all your assets to the trust upon your demise because you may want to leave some assets to your other children. In this case, you’ll need to a balance the need of all your children. Many parents do not wish to sell their property upon their demise unless it is absolutely needed. The reason is because if the property is sold, where would the other children stay? This may not be an issue if all other children are working adults but it is an issue if some of your children are still minors. One solution is to state it in the Will to delay the sale of the property until the youngest child reaches certain age (e.g. 25 years old). Once the youngest child reaches certain age, the property can be sold and proceeds injected into the trust. It is absolutely important that the trust must have already been setup prior to the writing of the will.
But to many parents, this may sounds a complicated process. Having done a number of similar cases, I suggest the following 3-steps “timetable”:
Hence, the timetable you should cater for is 3 to 6 months. Follow this 3-steps timetable and you would have accomplished a great deal for your special child! After completing all 3 steps, one of my client said to me, “I am so relief that everything is settled!”
This article first appeared on www.cpf.gov.sg
About the author:
Mr. Wilfred Ling is a fee-based professional financial planner advising and managing wealth for the sophisticated mass affluent looking for quality advice.
He holds the Chartered Financial Consultant® designation and is a CFA charterholder. In area of financial planning, he is ISO 22222 (SCI) certified.
To date, a significant number of such young families have engaged his services as an independent consultant on an on-going basis to advice them on all areas of wealth management such as tax planning, estate planning, investments and risk management and thus empowering them to make informed decisions.
His success is attributed to his unique advisory practice of providing objective advice and planning due to primarily being remunerated directly by clients through fees. Many young families have been attracted and benefited from his unique approach to wealth management as they continue to retain their existing private banking relationship managers and financial advisers for product transactions and yet are assured of obtaining objective advice from Mr. Ling.
He is also a regular writer for financial magazines and other online portals such as CPF Board’s IM$avvy primarily in areas of wealth management with topics relating to the mass affluent young families.
If you have concerns in areas such as insurance advice, investment advice, tax planning, estate planning, credit management, retirement planning and saving up for your children's education, feel free to engage his service.
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