When there is a will, there is a way

How estate planning is done in Singapore.

The inevitable truth of humanity is that our time here on earth is finite and all of us would eventually pass on from this world. Due to this finality, we all try to make the best use of our time and accomplish as much as we can. Amid these accomplishments, we would have gained possessions and assets that were intended to carry on our legacy. Whether you are a businessman or a consistent employee, a lifetime of assets can amount to a huge sum. That is why it can be important for an individual to plan accordingly while one is still in control of their finances and in a clear state of mind.

What is estate planning?

Estate planning is about how one would like their savings and the assets that they own to be distributed after that individual has passed on. Although Death is inevitable, it can sometimes be unexpected. During that time, it would be comforting to know that the assets that we gained in life can go on to care and protect our families. The process of Estate planning involves decisions that help to cover a wide range of an individual’s needs.

Why the need for it?

Estate planning prepares for many scenarios by ensuring that the people and causes you care about receive what you want to give them at the intended time. In simple terms, estate planning can help to provide assurance that your wishes are carried out after you are gone. This is especially important when you have people (spouse, children, parents) in your life that depend on you to provide for them.

The topic of death can be a hard conversation to have, but at the same time, it is very much needed. The loss of a loved one for your family is already a very tough and difficult process. With estate planning, it reduces any unnecessary arguments with regards to the individual’s assets which can lighten the family’s load during the grieving process. In addition, it also ensures that there is lesser delay when it comes to distributing those assets as certain dependents may require it to sustain their current needs.

What happens if you do not have an estate plan?

In the event that an individual passes on without an estate plan (e.g. A will), the remaining assets will be distributed according to the Singapore’s Intestate Succession Act.

It is important to note that for Muslims in Singapore, they would follow the Muslim Intestate Law known as faraid which is provided under the Administration of Muslim Law Act (AMLA). Any will made by the Muslim individual would also be conformed to the faraid principles.

How is estate planning done in Singapore?

Step 1: Knowing the value of your Estate

Before deciding who gets what part of your estate, you would need to know what you have. So, think about what you possess that is of value such as money, property and even your insurance payouts.

With regards to property, it is important to understand the nature of your ownership towards the property. If the individual is the sole owner, all rights and decisions about how and who the asset is transferred to will be up to that person. However, if it is a Tenancy-In-Common, then the individual only has the rights to transfer the portion of asset that is owned by him/her. In the case that it is a Joint-Tenancy, the individual does not possess rights to transfer it to another person as it would be automatically transferred to the surviving owner.

Other than what you own, one should also consider what they currently owe. The individual would need to take into account the liabilities that they have such as your car loan, housing loan and credit card debts. The total summation of your assets and liabilities would then be the net value of your estate.

Step 2: Deciding how would you want to transfer the Estate

There are basically 2 ways to entrust your assets. One is to ensure that it is distributed while the individual is still alive and the other is upon the individual’s death.

While the individual is still alive, it is possible to give away a portion of what they own to their beneficiaries through gifts or a trust. Gifts are as the name suggests, it is an unconditional giving of an asset which allows the beneficiary sole ownership of it.

The other would be a trust which is a legal agreement set up between the estate owner and the trustee. The trustee is the person who the owner has appointed to take ownership and manage the assets in the trust.

The owner is allowed to set certain terms such as deciding the beneficiaries and the amount of power that the owner wishes to still have in managing the trust themselves. The assets placed in a trust are not part of the deceased estates, thus it cannot be taken away even when the individual is gone.

People set up trusts to protect their assets from creditors and in the case of a divorce. Also, trusts can be used to allocate assets for beneficiaries who are not ready to manage them. The difference between this and the will is that it allows for the individual to transfer ownership of their assets to another person even before their death.

A will on the other hand, is a written document that executes a specific set of instructions and wishes of how one would like their assets to be distributed upon the individual’s death. Your will can include any set of instructions and is not limited to only your assets such as appointing a guardian for your child or how you would like your pet to be taken care of.

For Singaporeans, there is also the Central Provident Funds (CPF), and it is important to know that you are allowed to nominate who inherits this sum of money upon passing on. An individual can nominate anyone or organization to receive their CPF Savings. All you have to do is fill up and submit a simple online nomination form to the CPF Board.

Step 3: Reviewing your Plan

It is recommended that this plan be reviewed annually as there may be certain changes in your life that require amendments such as the changing of a legal name, inclusion of a new beneficiary, marriage or even divorce.

Some factors to consider

It goes without saying that it is important to consider who or what matters to you. Leaving a will should be about continuing your legacy or wishes. What better way is there to leave behind a legacy than to be able to continue providing care for your loved ones.

Another thing would be to consider how much your beneficiaries will need. Sometimes leaving a huge sum of money for someone who is not ready to manage it can do more harm than good. Understanding the intentions behind your actions is a key factor in making your estate plan decisions.

Lastly, knowing how much to leave behind and making plans to achieve them would be an important part of being able to leave enough assets for the people you care about. Therefore, it is vital that we know how much to leave behind and start working on those goals today. Do seek help from professionals to get feedback and guidance in planning for your estates in the future.

Conclusion

As many of us would agree, life is unpredictable and the only constant is change. The important thing is to prepare ourselves for those changes and unexpected events. Much rather than avoiding the inevitable, it is better to embrace it, so that we may make the necessary arrangements which would allow us to live a life without regrets.