Inheritance Creation

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How to create a meaningful inheritance on death: Money in the right hands at the right time

So, when you have an asset, say a family business, that you want to leave to one, or more, of your children who work with you, but you have insufficient assets for your other children not involved with the ‘family firm’. What do you do to ensure they are all treated fairly? it’s the eternal dilemma for all parents with more than one child.

The answer? Legacy creation for the non – inheriting children, through life assurance.

Leave the business to the child, or children, involved in it and set up a life assurance on your life for those that aren’t.

Having both “inheritances” will ensure that you have treated your kids fairly.

The premiums for the life insurance can be paid regularly from your income or you can use your capital, including business reserves or shares, without liquidating these assets to provide the insurance cover, with the capital being returned on your death.

The illustrated diagram below shows an example of legacy creation using life assurance.

Source: Old Mutual International Silk Sales Aid Pack

The sum assured under the policy can be adjusted if necessary to take account of the fact that the business may be an unrealisable asset that requires work, whereas the policy proceeds will be just free cash.

Simple but effective.

Ian Black
Head of Financial Planning & Wealth Solutions
AAM Advisory

This article is an op-ed piece by Ian Black. The views expressed in this article are those of the author and do not necessarily reflect the views of AAM Advisory Pte Ltd. This document/article should not be construed as an offer, solicitation of an offer, or a recommendation to transact in any securities/products mentioned herein. The information does not take into account the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a licensed financial adviser regarding the suitability of the investment product before making a commitment to purchase the investment product. Past performance is not necessarily indicative of future performance. Any prediction, projection, or forecast on the economy, securities markets or the economic trends of the markets is not necessarily indicative of future performance. Whilst we have taken all reasonable care to ensure that the information contained in this document is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness. Any opinion or estimate contained in this document is subject to change without notice. The above report may contain data obtained from third parties and as such we cannot guarantee the accuracy of this data.