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Protect your children against the things you can’t control

Protecting your children also means considering insurance and wills.

I remember the day after my son was born the nurses asked for him to be stripped of his warm blankets and his tiny naked body to be placed on cold metal scales to be weighed. While I knew this was routine, I felt a surge of protectiveness I had never experienced before, and the desire to keep this vulnerable little creature safe at all costs.

The urgency and intensity of that instinct dissipates as they grow older, however the desire to protect your child is a feeling almost all parents share. While in times of crisis we may find super human strength, the reality is that we cannot protect them from everything and some things are beyond our control. However, there are some things we can do to reduce the severity and impact if things do go wrong:

Protecting your children also means considering insurance and wills.

Child trauma insurance

One of the essential ways to protect our children is to ensure that they have sufficient financial resources if we are not around. Personal insurance for ourselves is very important, but it is less well known that it is also possible to take out insurance for children or grandchildren. A child trauma policy pays out a lump sum if a child is diagnosed with one of a specified range of conditions, such as cancer, or suffers a traumatic injury.

A friend has spent the past four years living through a parent’s worst nightmare – nursing their daughter through cancer. Unfortunately, she lost her battle just after Christmas and there is no money in the world which can mend the hole that her loss has left in the family. However, having the financial resources to devote as much time as possible to her care, love and support made a world of difference. Having the flexibility to scale back work, seek alternative treatments and get help for the rest of the family can make child trauma insurance invaluable.

Catherine Robson’s son when he was a baby. He is now in high school.

Gifts beyond life

One of the greatest gifts to leave your children is your affairs in good order. An essential element is providing clear and effective instructions contained in a legal will. A will not only deals with the distribution of your assets, importantly it can also appoint someone to care for your children until they turn 18. This is often the hardest decision to agree upon and one of the reasons that fewer than one in five families with young children have a valid will. If it is difficult to decide who will look after your children now, imagine the potential confusion and conflict in the event of your death. Always choose people you trust absolutely, and it is advisable to match the right skills with the appropriate role. For example, you may choose a relative or friend who is great with money to manage the finances on behalf your kids, but someone else to look after their day-to-day wellbeing.

Letter of wishes

One of the best things to include in your estate plan is a letter that outlines your wishes and provides context for your beneficiaries. This is a document that does not need to be drafted by a lawyer and can be the perfect place to provide guidance to your children about money. You can share the values that have shaped your own life and your vision for how your children might integrate these into their lives as they become adults. Taking the time to share this detail can help protect your children from making poor money decisions later in life. Scott Pape has published a touching and practical example on the Barefoot Investor site. You can also use a letter of wishes to communicate a recommendation for someone to help your kids, such as a preferred accountant or financial adviser. Your kids and their guardians will be free to use who they like, but in most instances, they will greatly value your guidance.

That vulnerable pink baby is now an independent young man who has just started high school. While I have moderated my protective instincts enough to let him venture to school on public transport, I take great comfort knowing I have protected his future wherever I can.

Catherine Robson felt a wave of protectiveness when her newborn son was taken to be weighed.

Article by Catherine Robson. Published by The Age, February 16, 2018.