This is a sad and terrible article about the deaths of parents and orphans who are left in a bad fix. Therefore, do not read this article and go no further if you do not want your day to be spoilt – and possibly the rest of your week. You have been warned.
If you are a parent and have young children, the likelihood of both you and your spouse die at the same time or at an early age is very low. I mean, what are the probabilities that you are in a car, plane, or ship with your spouse and both of you perish together? Or the possibility that you and your spouse are both struck with a terminal illness at a reasonably young age? Very low indeed. But if that does happen, what could be a possible outcome?
In Lemony Snicket’s A Series of Unfortunate Events, a 13-book fiction collection for kids, it depicts an unlikely but nonetheless horrible outcome for the three Baudelaire children who lost their parents and their home in a fire while the three children were out at a beach. Overnight, the children, age 14, 12 and 1, became orphans with no home to live in.
Leaving enough for our dependents
The only fortunate thing amidst the tragedy is that the Baudelaire parents left their children a fortune. From here you can deduce that the Baudelaire parents were very rich. If you are however not rich but would like to similarly leave a sizeable amount of money for your young children in the unlikely event of both your deaths, you should put the necessary instruments in place, such as cost-effective term insurance.
Therefore, the first lesson from the Baudelaire orphans is that you should consider whether you have left sufficient resources for your children’s education and living expenses in the event that you and your spouse are unable to be there for them. (If you have aged parents who are dependent on you, you should go further and include them in the above as well.) If you are thus far not put off this article and its terrible implications, please read on.
Choosing the right guardians for the children
The Baudelaire parents left a will, certainly a wise thing to do in those days as well as now. In the will, they left everything to their children, but unfortunately gave vague instructions regarding the welfare of the children – that the children “be raised in the most convenient way possible”. Mr. Poe, the Baudelaire parents’ banker and also the executor/trustee of their estate interpreted this to mean “within the urban limits of their city”. And Count Olaf was the only relative of the Baudelaire who met this interpretation. Count Olaf also happened to be a third cousin four times removed, or was he a fourth cousin three times removed? Well, you get the picture that he was a very distant relative. It turned out to be a most unfortunate outcome for the kids as Count Olaf was a greedy man who does not love kids. He was only interested in their riches. So the books tell of the various devious schemes he thought up to get hold of their monies. One example of this was when he tried to forcibly marry the oldest orphan, who is a girl! (Such a terrible thought indeed!) The kids fortunately managed to outwit him time and time again in the story but they had to go through several occasions of misery by being placed in difficult and depressing situations. Children in real life may not be as fortunate.
Therefore the lesson for us here is that we should be specific on who we wish the guardians should be. More importantly, we should choose them wisely! After all, we would do so much for our kids while we are living. Surely we should also give just as much thought as to who should be their guardians if something were to happen to us. As mentioned before, it is unlikely both spouses will pass away when the children are still young. But if it does, at least we will really rest in peace in our graves. And our kids, though sad over the loss of us, will at least appreciate that they have the best substitute parents they can have under the dire circumstances.
In fact if you can, it will be best for you to take time to think through and pen down your thoughts as to what your children’s lifestyle should ideally be, for example, that the children should be raised together in the same home, the schools they should go to, the faith they should embrace, etc. This will be a very precious and helpful guide to both the guardians and children eventually.
Choosing the right executors and trustees
In this sad tale, the Baudelaire parents had chosen their banker, Mr. Poe, to be the executor and trustee. As it turned out, it was not the best choice. After all, he has made a poor judgment by selecting Count Olaf to be the guardian in the first place! One wonders whether he had made decisions that were most convenient to him, rather than what was best for the kids. He also did not ensure that some of the wealth left by the Baudelaires were being used to ensure that the livelihood of the kids was adequate and reasonably comfortable. Instead, he took the most convenient way out and kept the monies largely unused until the kids had become adults when they became entitled to the monies. That left the kids in a ‘pathetic’ situation, living in poor conditions during their growing years when they need not had been so.
Thus the last lesson of this long and horrid article is that we should also choose the executors/trustees of our wills wisely as well. While we usually make our spouse to be the executor/trustee, our alternative executors/trustees should also be carefully considered as they will be there for our kids for the long run in our absence. They should be people who are willing to take up the burden to ensure that our kids are well taken care of and that the monies be wisely spent all the way until the children have become adults. From here, you can tell it may not be a one-off affair but something that is of long-term in nature when young children are involved. You may also want to consider separating the functions of the executors/trustees and the guardianship of the children to safeguard against fraud and abuse. Imagine the potential disaster for the Baudelaire children if Count Olaf was both the guardian and the executor/trustee. It would have been the most horrible outcome possible!
We hope that your reading of this article has not caused too much undue emotional stress to you. If it has, we wish you a speedy recovery and hope that you will thereafter take some time to properly do up a will or even set up a trust and prevent more of such sad tales from possibly taking place in future. Your children’s lives and future are indeed in your hands today.
This is an original article written by James Huan, Former Head of Legal and Compliance, and Ernest Low, Former Head of Fund Analytics at Providend, Singapore’s Fee-only Retirement Financial Adviser. The edited version has been published in The Business Times on 28th June 2006.