Don't Burden Your Children With Education Debt

Education fee has never stop increasing year after year. Parents are struggling to save some money and finding ways to fund their kids in their college or university. But it takes how long to save and can we cope up with inflation each year ? One of the easiest way is to get loan from private financial institution or applying government education financing scheme.When you talk about loan or financing , it is not a FREE stuff, it comes with interest rate and loan amount need to be paid back within certain time frame depending on the terms and conditions.

Can you imagine that your children after graduating will have this debt on their shoulder ? Are we not always teaching our kids not getting into debt but now most parents are putting debt onto their children by giving excuse that "we have no choice". Most of the graduates will not getting high salary when they first stepping into job market, they will have to take care of their day to day basic needs with the salary earned like food, lodging, support surviving parents, transportation, phone bill, car loan...etc. The monthly income is almost used up and how can they efficiently serving the study loan. This is one of the reason resulting a huge unpaid education loan in our country.

These graduates try to be disciplined and being responsible to pay the loan but due to the constrain in distributing their income, they have to make a choice to continue serving the loan or on hold temporary.
Can we parent do something to prevent this? Or we parent are being too selfish passing the burden to your children ?

Below are the commonly ways people raising fund.
1) Saving a portion of your income. ( Provided you are discipline enough )
2) Invest your money in share market or unit trust fund.
3) Start your own business.
4) Waiting for promotion or raise in salary
5) Working part time job to generate second income
6) Getting loan.

Above are the basic ways but will this bring good returns? What is the risk involved ? Do I have the experience ? Will I be healthy and safe all the time ? We can't predict accurately.

In your Financial Planning, never forget that Life Insurance playing a very important role, whether you like it or not you can't exclude it. In this case, Education policy is very important because it will secure your children education fund at the age of 18 to 25. You can withdraw during this time or upon maturity. You can use this fund to further you children education without getting any loan or you may use it to serving the loan later, it is all up to you. The most important thing is your children will not be burdened by the study loan anymore.

Education policy come with many other good benefits as this policy is one of the insurance products in the market. Some of the insurance policy will come with the feature if the payor of this policy diagnosed with critical illness, death and total permanent disability, this policy will still keep in force till maturity without paying any premium, it's all covered by the policy.

Plan today while your children are young unless you have better funding way. Do not let your children to be sued by the financial institution one day. Spend a little of your time to learn that this little thing can really give you "Peace of Mind ".



 
 

Important Check List That You Can't Miss...

Estate Planning and Wealth Succession

Many of us do not know that we have to pay for the Estate Tax upon death of an individual, this has no exclusion in Malaysia. You can avoid paying high tax if you have your estate planning set up today. You may be missing a piece in your financial planning.

Estate planning is necessary because it ensures that your heirs can receive your inheritance. Start to plan your wealth succession goal today, I can help you and assist you in developing an estate plan according to your wishes.

Review the checklist below and then call me directly. Free Consultation....Allow me to talk to you today.

How to Protect My Property with a Trust?

Setting a Trust is important as this could certainly give a complete protection to your loved one. Trust can help to protect :

1) Spendthrift beneficiary ( a person spending habit can changed at different life stage or by the influential of friends )
2) Protection against Settlor's creditors
3) Protection against Beneficiaries creditors
4) Protection from claims in a divorce

You can set conditions in your trust for the beneficiaries in order to receive income from the Trust fund such as must have university degree or professional qualification by age 25 or must be married and so on. Beneficiary can also be disqualified if he/she becomes bankrupt or convicted of criminal offence. Beneficiary will lose he/she entitlement to the Trust fund if the conditions are not met and will consider as disqualified.
At the end of the Trust period, only the qualify beneficiary will be able to receive Trust asset.

To have this Trust operate effectively, a Protector need to be appointed , He can acts as a watchdog for your beneficiaries. A Protector has the authority to remove or change the Trustee, audit the trust fund, recommend to the Trustee what are the needs of the beneficiaries and which beneficiary can be receiving from the Trust.

Protector / Watchdog can be Settlor's himself/herself during surviving time, it can be also Settlor's spouse,guardian of the child, close relatives or friends or someone trustworthy.


 

The Trust Structure

Trust is one of the Powerful Estate Planning Tools. It is use to provide preservation, distribution and protection of wealth. Every Trust is tailor made to fulfill your wishes and objective. Three parties will form up in the Trust. There are,

1) Settlor ( Settlor is the person who transfer the rights and possession of the property owned by him)
2) Trustee (An individual or organization which holds or manages and invests assets for the benefit of another)
3) Beneficiary ( A person entitled to an advantage, benefit, or profit such as an inheritance under a will or the proceeds of an annuity, insurance policy, or property held in trust).

There are two common trust, Living Trust and Testamentary Trust which you can use it in your estate planning effectively.  Living Trust can be revocable or irrevocable. The Trust will take effect upon signing the trust deed and when certain conditions occur, the trust can be executed  immediately without delay where Testamentary Trust will only be able to execute or take effect after the death of the testator.


Trust is a great protecting tools in your financial planning especially if you wish to protect a specific group of beneficiary. The fact that you could not denied is when a person died, all his/her assets will be frozen including liquidity assets in the bank. If it is with will, the process of going through the applying Grant of Probate (GP) will take 6 months to 2 years and if it is without will, it will takes maximum of 6 years ( provided no other issue) for the whole process.


The best solution is to establish a TRUST. The money in the TRUST fund can be used immediately. The trust fund is separated from the estate of the testators, it is not belong to the estate. Trust fund source can be from Life insurance, Unit trust, Marker shares or Cash on hand. Usually, Life Insurance is recommended as it can provide cash in the shortest time to the dependents. 


TRUST provide perfect protection as it can protect against spendthrift beneficiaries, protect against beneficiaries creditors, protection against Settlor's creditors Protection from claim in a divorce. 


Trust give a complete protection to your Insurance beneficiaries, it benefits everyone in the trust. If you have already purchased an insurance policy for your loved ones, please do consider Insurance Trust to make it a complete protection. It has a missing piece in your insurance planning if without Trust.

Should I have an Insurance Trust ?

Having an Insurance policy isn't enough to secure your loved one in the time of your mishaps. Many people still not aware of the important role of having Insurance Trust. I believe you are one of them too.
The role of an Insurance company is to ensure that the proceeds is payout on time and to the nominated beneficiaries. Insurance company will not have care much about how old or how young the beneficiary is, they don't even bother to know how the beneficiary wants to use the proceeds amount. You know your spouse or your children spending habit, are they able to handle the insurance proceeds especially the amount ? Is the guardian reliable and trustworthy? Will your spouse make unwise decision listening to the people around to make investment?

By setting up an Insurance Trust will definitely give you peace of mind because Trustee Company will become your beneficiary to handle the distribution of the insurance proceeds according to your instruction. You can give the instruction in the way you like and in control manner so that the insurance proceeds will not be spent unwisely by the beneficiary. You are still in control even you are no longer around. Trustee company will act on your behalf.

Therefore, it is advisable to consider setting up Insurance Trust to further protect your loved one. This will make your financial planning a complete one.

Contact me now for more information. I provide Professional Consultation Services, no obligation.