Estate Planning: Protecting Your Assets and Providing for Your Loved Ones

We work to accumulate as much wealth as we can in order to sufficiently provide for our family and loved ones during our lifetime. After our passing, our wealth may not be distributed to our loved ones in the way we intend without proper estate planning. Learn more about estate planning and why it is not only important, but essential to ensuring that our assets are properly distributed to our loved ones in accordance with our wishes, upon passing.

Understanding Estate Planning in Singapore

Estate planning is the process of arranging and managing one’s assets during their lifetime and determining their distribution upon death. It involves developing a structured plan to ensure the seamless transfer of wealth to one or more beneficiaries while minimising potential disputes and tax obligations. With proper estate planning, you can protect your assets, preserve your wealth, ensure proper succession, and safeguard your loved ones’ interests.

The types of assets that require protection typically include real and personal estates, investments, valuable possessions and intellectual property. These are some basic strategies you can consider employing to secure your assets and wealth for your loved ones:

1. Wills and Testamentary Trusts

Drafting a legally valid will and testamentary trust lets you dictate how your assets should be distributed upon your death. They usually outline the types of assets you have, their value, to whom your assets should be distributed, and when they should be given. A will and testamentary trust will only take effect after your death.

2. Business Succession Planning

Business succession planning requires deciding who will succeed your business when you retire or are unable to run it (e.g. due to death or illness). This involves identifying your successors in advance, equipping them with the necessary skills and knowledge, and establishing a transition plan. Ideally, the planning and preparation should begin at least five years before the intended succession. This will help ensure a seamless transition with minimal disruption and disputes.

3. Insurance Coverage

Adequate insurance coverage, such as purchasing life insurance or savings plans for yourself and/or your loved ones, can provide financial security for them and greatly mitigate potential financial burdens arising out of perilous situations.

4. Retirement Planning and CPF Considerations

Your CPF Special Account (SA) offers a higher interest rate that can help you grow your retirement savings much quicker than your CPF Ordinary Account (OA). Transferring your funds from your OA to SA allows you to get a higher return on investment.

CPF also allows you to nominate beneficiaries. It is encouraged that you do so ahead of time so that any remaining funds in your CPF accounts can be transferred to your loved ones when you pass. It is not possible to provide for the distribution of your CPF monies under a Will.

Importance of Estate Planning

Strategically structuring your estate plan can ensure a smooth transfer of wealth to your chosen beneficiaries. It can also help minimise potential tax liabilities, allowing your loved ones to receive a larger portion of your assets and wealth.

With a legally valid will, the appointed executor(s) under your will must apply for a Grant of Probate to call in and distribute your assets to your appointed beneficiaries. The appointed executor should seek the assistance of a probate lawyer. Conversely, in the absence of a valid will, the distribution of your estate will be governed by the provisions of the Intestate Succession Act, meaning that you will not have any control over who inherits your assets; your estate will be distributed according to law.

Learn More: Difference Between Grant of Probate and Grant of Letters of Administration

There are 9 Rules of distribution under the Intestate Succession Act which will govern the distribution of your estate if you do not have a valid will upon your death:

1. Where the deceased has left behind a surviving spouse but no children and no surviving parents, the spouse shall be entitled to the whole of the estate.
2. Where the deceased has left behind a surviving spouse and children, the spouse shall be entitled to half of the estate and the children will be entitled to the other half of the estate in equal proportions per child.
3. Where the deceased has left behind children but no surviving spouse or surviving parent, the children shall be entitled to the estate in equal proportions per child. If a child has also passed away, the deceased’s grandchildren from that child can claim their parent’s portion of the estate in equal shares.
4. Where the deceased has left behind a surviving spouse and surviving parent(s) but no children, the spouse shall be entitled to half of the estate and the parents shall be entitled to the other half.
5. Where the deceased has left behind surviving parent(s), but has no surviving spouse or children, the parents shall be entitled to the whole of the estate in equal proportions.
6. Where the deceased has left behind siblings but has no surviving spouse, children, or parents, the siblings shall be entitled to the whole of the estate in equal proportions. If a sibling has also passed away, the children of that sibling can claim their parent’s portion of the estate.
7. Where the deceased has left behind grandparents but has no surviving spouse, children, parents or siblings, the grandparents shall be entitled to the whole of the estate in equal proportions.
8. Where the deceased has left behind aunts and uncles but has no surviving spouse, children, parents, siblings or grandparents, the aunts and uncles shall be entitled to the whole of the estate in equal proportions.
9. If none of the rules above are applicable, the Government shall be entitled to the whole of the estate.

Estate planning is an important and potentially complex process that requires attention to detail and professional guidance. Working with a probate lawyer can aid you in crafting a comprehensive estate plan that accurately reflects your wishes and properly safeguards your legacy.

Quahe Woo & Palmer LLC’s experienced team of family and probate lawyers in Singapore can help to simplify the planning and management of your estate. Contact our lawyers today for assistance.