<p>Financial dependence is one of the worries of ageing parents. Some of them are lucky to get a post-retirement pension, but a majority of them depend on the support of their children.<br />For this reason, children should cover financial protection to parents as part of their Personal Finance planning.</p>.<p>Parents, who have lived independently, taking care of the entire family, will find it difficult to lean on the shoulders of their children for their day-to-day expenses at their old age.<br />Fortunately, there are many instruments where one can assign monthly payouts to the parents’ accounts, which assure financial security to them. Secondly, the rising cost of<br />medication, hospitalisation can only be met through adequate insurance cover, without causing financial strain.</p>.<p>The most popular and must-have financial products are Senior Citizen Savings Scheme (SCSS) and Pradhan Mantri Vaya Vandana Yojana (PMVVY), wherein up to Rs 15 Lakh can<br />be invested in each product per individual. Similarly, the Post Office Monthly Savings Scheme also offers a high rate of interest and supports a regular source of income to meet<br />the day-to-day cost of living for the parents.</p>.<p>Investments as above will not only give a sense of independence to the ageing parents but also act as a tax planning tool for the earning children. The amount gifted to parents is tax-<br />free, earns a higher rate of interest and such interest is taxable in the hands of parents at a lower tax bracket.</p>.<p>It would be wise to invest the money in liquid assets. I have seen cases where the children impress upon their retired parents to part with their hard-earned liquid financial assets to<br />acquire a house or flat. This will take away the financial independence of the parents during their old age. In a situation like this, parents should not yield to the pressure of the children or get tempted to invest in immovable properties with the sacrifice of liquid wealth.</p>.<p>India has moved from the Joint family system to a Nuclear Family system. Now, it is inching towards the Nano Family system – only husband and wife! Parents and kids live separately.<br />However, Children’s responsibility to look after the parents has not been reduced. They are not only morally responsible but are also legally bound to care for their parents.</p>.<p>If the parents can’t stay together with the children for various reasons, then as per the Maintenance and Welfare of Parents and Senior Citizens Act, 2007, children have to<br />support them with Rs 10,000 per month towards maintenance (Note: The amendment bill of 2019 removes this upper limit, so the cost may go up on a case-to-case basis) and also find<br />them a decent place to lead a dignified living.</p>.<p>We have come across many instances where the children have abandoned the parents after transferring the property through Gift Deed. A word of warning to such erring children!<br />The Maintenance Tribunal has the powers to cancel the Gift deed by nullifying the said transfer as void. So, abusive children can’t shunt their parents away after getting the<br />property.</p>.<p>Considering this, I always suggest my elder friends not to transfer any of their assets, during their lifetime, to their children or grandchildren. The assets give financial<br />independence during old age. Having said that, execute the required documents including a Registered Will for the smooth transition of assets to the children. They shouldn’t find it<br />hard to gain control over the assets, which they have to rightfully inherit.</p>.<p>This apart, as per the above Act, children, I mean, son, daughter, grandson and granddaughter, stepchildren, adoptive children or children-in-law are obliged to look after<br />the parents, including grandparents. If they fail to do so, the parents/grandparents can file a petition with the Maintenance Tribunal for relief.</p>.<p>I read a judgment wherein the High Court directed a son, who had misbehaved with his parents and had manhandled his mother, to vacate the house within 30 days. So, my young<br />friends, please share this information with your peers! If Seniors complain, one may have to pay a fine or face a jail term of up to 6 months.</p>.<p>Not sure how far this legal recourse will benefit the deprived, but surely, the awareness of such an Act itself will act as a deterrent for ill-doings by abusive children. Considering both<br />moral and legal aspects, the ever-increasing cost of healthcare, the children have to factor the maintenance and welfare cost of parents also in their retirement plan and thus help the<br />seniors lead a peaceful life.</p>.<p>(<em>The writer is Chartered Accountant and registered valuer</em>)</p>
<p>Financial dependence is one of the worries of ageing parents. Some of them are lucky to get a post-retirement pension, but a majority of them depend on the support of their children.<br />For this reason, children should cover financial protection to parents as part of their Personal Finance planning.</p>.<p>Parents, who have lived independently, taking care of the entire family, will find it difficult to lean on the shoulders of their children for their day-to-day expenses at their old age.<br />Fortunately, there are many instruments where one can assign monthly payouts to the parents’ accounts, which assure financial security to them. Secondly, the rising cost of<br />medication, hospitalisation can only be met through adequate insurance cover, without causing financial strain.</p>.<p>The most popular and must-have financial products are Senior Citizen Savings Scheme (SCSS) and Pradhan Mantri Vaya Vandana Yojana (PMVVY), wherein up to Rs 15 Lakh can<br />be invested in each product per individual. Similarly, the Post Office Monthly Savings Scheme also offers a high rate of interest and supports a regular source of income to meet<br />the day-to-day cost of living for the parents.</p>.<p>Investments as above will not only give a sense of independence to the ageing parents but also act as a tax planning tool for the earning children. The amount gifted to parents is tax-<br />free, earns a higher rate of interest and such interest is taxable in the hands of parents at a lower tax bracket.</p>.<p>It would be wise to invest the money in liquid assets. I have seen cases where the children impress upon their retired parents to part with their hard-earned liquid financial assets to<br />acquire a house or flat. This will take away the financial independence of the parents during their old age. In a situation like this, parents should not yield to the pressure of the children or get tempted to invest in immovable properties with the sacrifice of liquid wealth.</p>.<p>India has moved from the Joint family system to a Nuclear Family system. Now, it is inching towards the Nano Family system – only husband and wife! Parents and kids live separately.<br />However, Children’s responsibility to look after the parents has not been reduced. They are not only morally responsible but are also legally bound to care for their parents.</p>.<p>If the parents can’t stay together with the children for various reasons, then as per the Maintenance and Welfare of Parents and Senior Citizens Act, 2007, children have to<br />support them with Rs 10,000 per month towards maintenance (Note: The amendment bill of 2019 removes this upper limit, so the cost may go up on a case-to-case basis) and also find<br />them a decent place to lead a dignified living.</p>.<p>We have come across many instances where the children have abandoned the parents after transferring the property through Gift Deed. A word of warning to such erring children!<br />The Maintenance Tribunal has the powers to cancel the Gift deed by nullifying the said transfer as void. So, abusive children can’t shunt their parents away after getting the<br />property.</p>.<p>Considering this, I always suggest my elder friends not to transfer any of their assets, during their lifetime, to their children or grandchildren. The assets give financial<br />independence during old age. Having said that, execute the required documents including a Registered Will for the smooth transition of assets to the children. They shouldn’t find it<br />hard to gain control over the assets, which they have to rightfully inherit.</p>.<p>This apart, as per the above Act, children, I mean, son, daughter, grandson and granddaughter, stepchildren, adoptive children or children-in-law are obliged to look after<br />the parents, including grandparents. If they fail to do so, the parents/grandparents can file a petition with the Maintenance Tribunal for relief.</p>.<p>I read a judgment wherein the High Court directed a son, who had misbehaved with his parents and had manhandled his mother, to vacate the house within 30 days. So, my young<br />friends, please share this information with your peers! If Seniors complain, one may have to pay a fine or face a jail term of up to 6 months.</p>.<p>Not sure how far this legal recourse will benefit the deprived, but surely, the awareness of such an Act itself will act as a deterrent for ill-doings by abusive children. Considering both<br />moral and legal aspects, the ever-increasing cost of healthcare, the children have to factor the maintenance and welfare cost of parents also in their retirement plan and thus help the<br />seniors lead a peaceful life.</p>.<p>(<em>The writer is Chartered Accountant and registered valuer</em>)</p>