Gulf News August 1 2009
11 August 2009
Gulf News: Protection is Key to Estate Planning
A friend of mine died a few months ago. He was married with two children. His wife and family are now suffering very badly financially as her husband provided the main income for the family. As I am also a married man with children I was wondering what steps I could take now to avoid a similar situation arising for my family?
Death is not something most of us want to think about, however it is of course inevitable for us all. Most of us expect to live a long life and die in old age - the reality is often very different. Through tragic accidents, unexpected illness, or other circumstances, when death occurs it can have devastating effects on those we leave behind, as your friend’s situation has shown.
There are some very important things to consider. The cornerstone for any individual financial planning is protection. Without adequate life and illness protection in place, a person will not be able to afford to plan for retirement, save or invest should they become seriously ill, or unable to draw an income.
Firstly it is essential that you have adequate life assurance in place. This is clearly vital if you are the main breadwinner, but it would also be important for your wife to have life assurance also. Just ask yourself the question; how would you cope with handling a job and a family if your partner were to die suddenly?
In considering the amount and type of life assurance to have, several factors need to be taken into account, and I suggest this would be best discussed with an independent financial adviser. Things that need to be discussed should include your current and potential future earnings, and your age and state of health. Your family circumstances need to be considered, as well as your current assets, particularly your liabilities that should be considered in view to your intent to move from country to country.
It is also important to think about protection in the case of ill health – protecting your family from the unexpected. The statistics can be sobering, for example, more than 10 million people worldwide are diagnosed with cancer each year, 40 percent of whom survive, according to the World Health Organisation. The quality of life and income of cancer patients and their families can be greatly improved by the financial provision of essential care and support.
Consider how you would cope without an income if diagnosed with a serious illness such as cancer, heart attack, or stroke, and unable to earn a living? Again this is an area best discussed with an independent financial adviser.
Expatriates living in the UAE should also consider having a will made here. This is very important, whether or not you already have a will in your home country. This will ensure that should you unfortunately die your family will be taken care of in the way that you would have wished. It also reduces complications with regard to the handling of your estate, and makes things a little easier with regard to funds held in banks etc.
Another important factor in considering the writing of a will is your surviving children. A will allows your nominated guardians to be appointed immediately, so avoiding the worst case scenario that without a will, minor children are left without family or friends. If this happens the authorities will be obliged to intervene and make the arrangements which they think most appropriate.
An independent financial adviser should be able to assist you with this. You cannot protect yourself against all incidents, but making provisions for the financial implications is something everyone can do.
By Brian McGregor, a UK qualified Independent Financial Adviser with Nexus.