You live in a leasehold HDB flat, and you don’t possess millions of dollars in assets. By all accounts, you don’t really have much in terms of fortune—the type that is possessed by the crazy-rich scions of wealthy families and the kind that is romanticised in movies and TV shows. So why exactly should you have an estate plan when it looks like it’s going to be a walk in the park disposing of your assets anyway when the time finally comes for you to bite the dust?
There are several important benefits to having an estate plan in Singapore. In this short guide, we’ll quickly go through some of them.
Estate Planning Will Allow You to Dispose of Your Assets According to Your Wishes
The quick answer to the question of why estate planning is important is quite simple: it is a legal and effective method of making arrangements to manage your estate and financial affairs when you pass on. If you don’t have a will, a trust, or a lasting power of attorney, your assets will be distributed according to Singapore’s intestacy laws, supplanting your actual wishes on how you may have wanted them disposed of.
Imagine the amount of frustration and heartache your loved ones may have to go through when it is the state that gets to have the final say about what to do with the assets you leave behind. Designating your beneficiaries and appointing “attorneys” who can act on your behalf can save your family members the time, money, and aggravation while ensuring that your estate is distributed exactly in the manner that you desire.
An Estate Plan Takes Care of Your Dependents
We’ve already established that estate planning benefits not only the rich; it also benefits just about every other person of legal age in Singapore. However, it’s most especially advantageous to those with dependants, like children, elderly parents, or family members with disabilities.
This is the most important element of estate planning: designating your heirs no matter how much or how little you might have. You get to have a say what happens to your savings, investments, and real properties should something happen to you. You’re able to make sure that your loved ones are taken care of and that they will benefit from the wealth you’ve accumulated specifically for the purpose of providing for them in the first place.
Estate planning will also allow you to determine what happens to your CPF savings after your death. Because CPF savings—like the balances you might leave behind in your Ordinary, Medisave and Special or Retirement Accounts—are not considered part of your estate, it is important for you to make a CPF nomination. Otherwise, your CPF savings will be transferred to the Public Trustee’s Office (PTO), which will then distribute your assets to your family depending on how they see fit. This will be done according to the Intestate Succession Act Singapore citizens abide by.
Creating an Estate Plan Also Helps You Prepare for Your Own Needs
It’s true that an estate plan allows you to elect your heirs when you pass away, but did you know that estate planning can also help you prepare for your own needs in the event that you lose your mental capacity or become unable to make decisions for yourself?
Estate planning can help you appoint people you trust to act on your behalf through a legal document called a Lasting Power of Attorney (LPA). Doing so will allow you to safeguard your interests and give you peace of mind, knowing that your loved ones can make decisions for you should you ever lose your ability to make financial and legal decisions while you are still alive.
Take note that members of your family are not automatically given the right to legally act on your behalf, a fact that can hinder their ability to look after your needs. Only an LPA can make sure that they will be able to manage your estate legally and make arrangements for your everyday care.
Estate Planning Will Prevent Conflicts from Erupting within Your Family
What’s worse than dying and not having a say in whether or not the people you love will benefit from the estate you leave behind? It’s probably dying and having members of your family fight over your money and properties. It’s the kind of drama that you’ve probably seen somewhere on television before, one that can get really ugly and leave you rolling over in your grave.
Creating an estate plan allows you to preemptively terminate such conflicts. By designating who is legally responsible for your assets when you become mentally incapcitated, or by deciding how much each of your heirs will get when you pass away, there will be no room for strife to occur. You’ll also be able to prevent any relatives you might hate with a passion from even attempting to get a share of the pie, which is probably one of the most desireable benefits of protecting your assets with an estate plan.
Estate planning is not just the domain of the rich and the powerful in Singapore. Anyone with any amount of assets will benefit from the protection that a well-thought-out and well-executed estate plan brings. It can be a complex and challenging process, but it’s a necessary one that will make your family more ready to face the uncertainties of a future without you.