One morning while Steve was having breakfast and reading the newspaper, his wife suddenly asked him whether he will re-marry again if she dies. Steve was surprised with by that question and asked her why she is asking such a strange question early in the morning. In response , she said “ Well, I have been thinking about it for some time and I needed to get it off my chest but could not do so as you have been so busy. So, I guess today is the day when we have a bit of time to ourselves.” Steve looked at her and said “ The answer to your question is “No” .”
Then she continued by asking Steve whether he will let his new wife used her favourite apron if he remarries. Steve took a deep breath and said “ I don’t know where this is going. Anyway ,if you want answers then the answer to your question is again “ No”. If there are anymore questions please feel free to ask.” His wife asked again “ Will you let her use my favourite silverware ? “No” replied Steve. What about my favourite kitchen gloves ? Steve again said “No” . Would you let her use my Golf set ? Steve in a frustrated tone replied “No”. Don’t worry she is a left hander while flipping through the newspaper.” Then Steve suddenly realised that he has a gift of the gap at the wrong time.
I think my guess is as good as yours on what is going to happen next . Naturally, there is going to be a volcanic eruption in the kitchen . But after the dust has settle , I believed the next instant reaction from Steve’s wife would probably be a separation or a divorce or for her to claim everything he owns during the divorce instead of just getting angry at him.
The above story assumes that she is a housewife with minor children and her husband is the bread winner. I think her likely thoughts going through her mind would be the financial security for herself and especially her children. What can she do to protect herself and her children in the event her husband remarries? One option she can choose is to ensure her husband has a will which sets out the appointment of Executors , Guardian and naming the beneficiaries of his estate all of which would most likely to be for her and her children.
Presuming her husband has prepared a will to appease her worries and she still feels insecure because a will can be changed anytime, then its best to consider setting up a Trust where specific assets are placed in it. This is to ensure that such assets will be distributed to her children in the future and in some cases be made irrevocable and the terms cannot be amended as well unlike a will. Besides transferring cash and unit trust into the trust, it is best to include insurance policy in it to ensure there are sufficient funds for the children in the future. The amount of sum assured required would be based on the estimated financial needs of the children that may be incurred. Having a trust would be better than an insurance nomination because it can be revoked and a lump sum payment may ends up in the hands of the children who may not be mature to handle such large sums of money.
So, having the husband create a trust with the life insurance assigned to the trustee together with cash and unit trust would be a better solution. In this way, she can be certain that the policy monies and other assets will be disbursed directly from her husband’s Trust to benefit her and her children in the event of death.
In such a trust, it is important that the trustee should be a trust company that have the advantage of continuity, experience, knowledge and professionalism. The settlor who creates the trust (in this case the husband) can appoint a Protector as a watchdog for the trust for the benefit of the beneficiaries. The Protector would provide a check and balance to ensure that the Trustee carries out its duties. Once the settlor have decided on the key persons such as protector and beneficiaries as well as the assets to be placed into the trust, the trust deed which documents the instruction of the settlor would be prepared and executed by the settlor and trustee.
By creating such a Trust , the husband can then give his wife some peace of mind and no matter how hopeless their relationship is , she can at least be hopelessly devoted to a “Trust”.
