Kids' Camp 101: Mums in panic mode!

My 10 year old is going away for the first time to a 2-night camp at Milson Island, Hawkesbury, this Wednesday.  His school sent home a list of recommended things to pack.  I kept one eye on that list and was confident that everything was in order.

The Sunday before the big day, we went through the list, and I gulped!  

"Gab, we have no insect repellant!  And your thermals (long johns) are still hanging in the laundry.  But we have to practice packing tonight so I have time to run to the shops for anything we missed."

"Ayayay, mum, you are panicking!"

Indeed I am.  

A week before, I told Gab that he must use his sleeping bag and practice folding it every morning.  I knew that this will be tricky.  It is essential that everything fits in his luggage so nothing is left behind.  Packing his sleeping bag turned out to be quite challenging for this kid.  I assumed that being our son (Mum and Dad hiked Philippine mountains in their youth), Gab will breeze through this.  Wrong. Alas, he complained about his fingers hurting, and how it is not easy to fit the sleeping bag into its bag ... (This mum had to find a bigger bag.)

It suddenly dawned on me how sheltered 2nd Generation migrant kids are.  They will never experience "isang kahig isang tuka" or "nabuhay lang kami sa utang buwan buwan".  Their lives are so far removed from our own experiences.  But I digress ...

As much as I worry, I actually relish the thought of Gab's time away.  It will teach him decision-making, looking after his things, and responsibility.

"Just make sure you take a shower everyday whether it is in the morning or at night.  And it is OK to re-use any of your clothes if you run out as long as it is not soiled.  I did pack enough spare clothing so ... I think you should also use your journal to record your thoughts at night.  And please remember to brush your teeth properly!"

"Ayayay, mum!"

I asked Gab what is he looking forward to the most?  His answer was: "Time away from Kuya!"

It seemed to him, that his older brother's mission in life is to annoy him everyday!

About a Will ... revealed!

Disclaimer:  This article is not a financial advice.  This is just me sharing to the wall!  I am simply recalling what, why, and how we did it ... This daunting task is, hopefully, simplified :) 

A will is one of those things that most people put in the "too hard" basket.  You either procrastinate or you forget about it altogether.  But this should not be the case when you have dependents. Especially not so when you have a dependent who will be needing lifetime care (read: a special needs child). Contrary to popular belief, a will is not only for the rich and the famous. You, yes you, will  need one too. Not only does a will ensure that your surviving family is looked after according to your wishes; a will also protects the time, energy and resources you spend in building your wealth. 

Having said that, in my opinion, a will is not essential if one has straightforward investments. Your superannuation plan and life insurance policy will have nominated beneficiaries, after all.

But what if you have shares, investment properties, businesses and other assets? It is useful to consider how you want your dependents to receive their inheritance. Will they have access to it at age 21 or will they get it later? Will they be needing guardians? Who do you appoint as trustee, etc. The possibilities are endless; the whole exercise can be mind-boggling!

The hubby and I always knew that we needed a will. But like everyone else we found various reasons to defer attending to it. Finally, when last year's U.S. holiday became imminent, we thought, "OK, we can't put this off any longer. Who knows what could happen to us in this trip?"

So let's get cracking and try to dissect this thing called The Will. It might be useful to think of a flowchart when preparing it.

Case 1: One surviving spouse. Each partner draws up his or her will. The surviving spouse receives full inheritance when the other party dies. End of story. The surviving spouse must then update his or her will to take his or her new status into account.

Case 2: Both spouses fail to survive. You will need to appoint a guardian for your children. Ideally, this would be an adult next of kin. If no next of kin is willing or able - this is especially true for migrants with no relatives in their adopted country - then nominate a trusted friend. It is assumed that the guardian will provide care for the minor children. Therefore, this person must share your values as they will be caring for your kids. If you cannot find a trustworthy relative or friend, then the State may become the guardian for your children. The State will make the decisions about foster care, for example.

Appoint an executor. The executor is the person who ensures that all provisions in your will are executed accordingly. This is usually a lawyer. However, if the trustee (see below) is sufficiently familiar with the law he can become the executor too.

  

Appoint a trustee. The trustee is the entity who will carry out the provisions of your will. These provisions may include the sale of assets, distribution of assets to beneficiaries, settlement of debts (including death expenses), payments to the guardian for the children's food and lodging expenses, providing for the education of the children, etc. Whereas the guardian looks after your children, the trustee, on the other hand, manages your assets. The trustee and the executor can be the same person. However, it is not advisable for the trustee to be the guardian at the same time. For if the left hand - the trustee - gives to the right hand - the guardian, who will ensure that all transactions are at arm's length; i.e. honest? A lawyer or the State (called Public Trustee) can act as trustee in the absence of a trustworthy relative or friend.

Provisions for the children. The hubby and I declared in our will that our children must reach the age of 25 before they can have complete control over inherited assets. We thought that age 25 is the right age when they hopefully will achieve financial maturity. Prior to age 25, the trustee shall issue payments for their maintenance.

Case 3: The whole family fails to survive.  Then you will need to specify provisions for other beneficiaries. You may nominate beneficiaries living overseas. You can allocate shares of your total assets to your surviving parents or siblings. You may want to "gift" $100,000 to your mother or father or other siblings, for example. These gifts will be awarded to them after the sale of your assets and payment of your debts.

This is where the right level of life insurance cover becomes essential. If you do not have sufficient cover, the proceeds from the sale of your assets may only be enough to pay off your bank debts; leaving your spouse, your children and other beneficiaries with nothing. A will in such a situation isn't worth the paper it is printed on.

How to get started.  In Australia, you can get a booklet for a do-it-yourself will from your post office for a small amount. This is usually sufficient for simple wills. However, when you own a few assets, or you have investments in shares or other instruments or if you have a business, I strongly suggest that you engage a lawyer instead. A lawyer can take you through all the legal issues, answer all your questions and give you peace of mind knowing that you are going about ensuring the future of your dependents in the best manner possible. A fee of $200 to $300 is well worth it, I believe.

Saying this, even the best lawyer in the world cannot possibly draft a will that will cover every eventuality in your life. It is best to keep your will simple and just take comfort in the fact that a will can be changed any time. Who knows, you might win the Lotto or, God forbid, end up in divorce court. You might have a change of heart about your guardian or trustee. It is, therefore, a worthwhile exercise to revisit your will every couple years or as your circumstances or the circumstances of the parties involved in your will change.

So there you are folks, rather boring. But hey, it does feel good to get it out of the way. You can now rest in peace!

For the story about Life Insurance, here is the link again.

Pinoy Rock icon of the 90s

Remember Wolfgang?  It's "Darkness Fell"

And so she woke up from a dream
That was beautiful and starry and oh so wild
It was all still clear in her eyes
And though her mind was foggy and blank
She wondered why
Her life couldn't be as lovely it was time
There was this king he had a castle or throne
But his horse was great and white
He rode alone and liked it that way
But when he met her he swore
He would never leave her side
They rode across the land two lovers hand in hand
And no danger would come near
And when something made her cry
She'd look at him teary eyed
And he would make her feel better
So much better so much better than before
And now this forest was his home
It was a night time and the right time for love in the dark
She placed her hand upon her chest
And all the rest just flowed
Makin' love down under an ancient far away night
It was so grand just holding someone's hand
And now safety came naturally
It was so clear that she would never have to fear
Oh tell me a story of magic and spiralling ships
And the stars in the night
Just whisper in my ears make it soft make it clear
I want to hear every breath you say
She placed her hand upon her breast
But she woke up from the land tears falling in her hands
As she looked up asking why
She laid back in her bed thoughts rising in her head
Why can't my life be beautiful she said
As she closed her eyes again
Just prayin' he'd return
But only darkness fell 

I'm just saying ... (aka 'Of Life and Insurance')

Disclaimer: This is by no means a financial advise. This is just me talking to the wall ...

And so I came out of my visit from my doctor feeling quite relieved.  The scary word that was dangled about was most assuredly ruled out.  I am generally OK.  But this is not about my condition.  This is about the people I most care about in my life.  It is about protecting them.  

A couple of years ago, soon after we purchased our new home, the hubby and I decided to get serious with our insurance.  In Australia, anyone who is employed gets automatic insurance within their superannuation.  But the sum insured is, let's be honest, quite paltry.  A financial adviser gave us free advise - we should get cover that will pay off the mortgage and some.

1) Life Insurance and Total Permanent Disability, uncovered

The rule of thumb in determining one's insurance is the size of one's mortgage times two.  The magic figure for us is $1M.  Yes, make your spouse a millionaire!  And why not?  Let me explain why.  The money must be enough to pay off your mortgage, and give your spouse the ability to choose to stop working for as long as required to grieve, support the children, and deal with your departure.  Imagine how life changing that will be!  I can't even begin to imagine the pain and loneliness ...

But the premium payments for a $1M insurance is hefty, I hear you groan. Well, I have good news for you.  You don't even get to see your premium payments if you take insurance within your superannuation!  Yes, all you have to do is increase your cover within your super. Not only will you get a cheaper premium (your employer will normally have pre-arranged volume discounts), you never even get to see your repayments (fees) as these are all deducted from the cash component of your super assets.  Hah, you even pay with your before tax income (the 9% employer guarantee is taxed less). Oh, you ask, wouldn't that reduce my super asset base?  Of course it will. But let's be honest. Or let me be honest. My super balance is quite pathetic. Not only did I start my working life in Australia very late (I lost 10 years of my working life, having migrated when I was already 30 years old), but the global financial crisis almost halved whatever small amount I have. Truthfully, I do not look at my super as my nest egg. After all, the government can change super laws any time. You will be better off using other investing vehicles such as shares and property. (Which is by the way, another blog.)

So, my life insurance is now $1M within my superannuation.  My insurance provider only asked me to provide a more exhaustive medical report to assure them that I do not fall off the perch anytime soon.  Next important is Total and Permanent Disability.  TPD means that you get very sick, and your disability is permanent that it is unlikely that you will be able to go back to work.  So insure for a similar amount - $1M.  After all, your spouse could become your full-time carer for a certain period.  You need to have income flowing in.

Life and TPD ... increasing your cover is easy but requires some documentation and follow-up.  If you care, you will breeze through these ...

2) Income Protection Insurance

This type of protection is for temporary sickness. It does not cover the event of losing one's job unfortunately. The product disclosures are daunting. Nevertheless, read it. Place it on your bedside table ... there's no excuse for negligence! Once again, get income protection within super. Premiums are lower and you don't contribute a cent of your after-tax income.

There are waiting periods of 30, 60 and 90 days. If you have some savings, then you may opt for either 60 or 90 days.  Insurance payment periods are generally 2 years, 5 years or to age 65. If you can afford it, aim for 5 years or to age 65.  I don't believe there is such a thing as too much insurance.

So there you are, dear friends. I hope I have empowered you to act NOW. Or it will be too late ...

One important postscript. You need to update your superannuation beneficiaries every three years.  A lot of people either miss this or are not aware that beneficiaries become nil until you advise your super provider otherwise every three years!  Do yourself a favour, login to your super account and make sure that your list of beneficiaries is up to date and listed correctly!

Next blog ... Making a will is essential!