Estate Planning? Avoid making these 3 big mistakes.
The passing away of a loved one can be a cause of great sorrow to family members and to others who are close to the deceased person. An individual’s spouse and children will probably feel the loss the most. Unfortunately, a family’s grief is often accompanied by the difficulties associated with getting legal access to the deceased person’s assets and property.
However, most of the issues connected with passing on an individual’s wealth to loved ones after a person’s death can be resolved quite easily if adequate care is taken well in advance.
What happens if you don’t do any estate planning at all? There are many individuals who do not make a will or take any of the other steps that are available to them regarding the wealth they leave behind. They assume that after they pass away, matters will simply sort themselves out.
It is true that Singapore’s intestacy laws provide the manner in which the assets of a person who dies without leaving a will are to be distributed. But the distribution pattern according to the law may not provide for your family members in the way that you intended.
Here is what the Rules of Distribution under the Intestate Succession Act say.
Person who dies without leaving a will
Deceased person’s relatives
Who will get the benefit?
Whole share to the surviving spouse
50% to surviving spouse and
50% to children
50% to surviving spouse and
50% to children
Parents not entitled
According to the existing law in Singapore, if, say, the husband dies, all his wealth will go to his wife and children, and his parents will not receive any benefit at all.
Why it is essential to make a will
There would be some people who are in absolute agreement with the country’s intestacy laws. Their intention would be to leave their wealth behind in exactly the same manner as laid down in the Intestate Succession Act.
But many Singaporeans are unaware of the intricacies of the intestacy laws. Hence, in most instances, it is advisable to make a will. Making a will allows you to appoint an executor. This individual will take the legal responsibility for the deceased person’s remaining financial obligations. This includes disposing of the property if required, and paying the bills and taxes that are due.
If you have a young child, it is essential to make a will in which you specify who will be the child’s guardian in the event that both parents pass away. This simple step could go a long way in providing for the well-being of a child. A will could also provide details about how your child’s financial needs would be taken care of.
Making a will yourself
Writing your own will could seem to be an attractive option. You could avoid the repeated visits to a lawyer’s office and the fees involved.
But in most instances, taking a do-it-yourself approach could be the wrong choice. A lawyer will be able to understand your needs and provide guidance that is tailored to your circumstances. A lawyer will also be able to give you information that you may not be aware of.
What is the sort of information that you could possibly need? Take the example of a couple where only the husband has made a will. If both die in a plane crash, the legal position is that the elder person has died first. In this situation, if the husband’s will left all his wealth to his wife, she would be the sole beneficiary.
But since she too has passed away and has not left a will behind, the assets would be distributed according to Singapore’s intestacy laws. This may not have been the intention of the person making the will.
Setting up a trust
Many individuals create a testamentary trust by leaving explicit instructions in their will. The trust comes into effect only after the person’s death.
The purpose of establishing a trust in this manner is to exercise a certain degree of control over the distribution of assets after a person’s death. For example, an individual may set up a testamentary trust to provide a monthly allowance to the beneficiaries instead of bequeathing the entire amount in a lump sum.
Estate planning can simplify the passing on of your wealth
It would have taken you several decades of hard work to build your assets to the level at which they currently are. In the process, you would have made many sacrifices so that your family could be financially comfortable. After doing so much for your loved ones it is crucial that you also put in a little effort into planning your estate.
Incurring some expenditure for getting legal advice on how to make a will and the best way to plan your estate is money well spent. It will allow you to allocate your money and your assets in the exact manner that you want and also save your loved ones from needless legal complications.