I give this advice to attendees at my educational talk.
If a parent has more than sufficient assets for his or her future needs, the parent can distribute some of your assets to the family members early, rather than wait till the parent passes away.
This is how it can be done.
1. Assume a parent has $1 million of assets. Many middle income parents have this sum, inclusive of the value of a property.
2. Take $500,000 to buy a life annuity. It should give the parent more than sufficient for future needs.
3. Keep $150,000 in liquid form for emergency needs.
4. Distribute $350,000 to the children now (when they reach, say, 25 years)
The parent can vary the amounts according to the personal circumstances and the amount of the assets.
The advantages of this arrangement are:
1. No need to pay estate duty.
2. The money is more useful to the adult children now, rather than many years later (on death of the parent).
If the parent does not wish to give a lump sum to a child at 25, the parent can buy a fixed term annuity to pay the money over a period of say, 10 years.
Some attendees told me that they have not thought about this idea before, but they will like to consider it.
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