Many of us have wondered why there’s more and more talk about the importance of writing a Will nowadays. There are good reasons for this which I will highlight in this article. For the picture to be complete, however, you will also need to consider how your CPF monies will be distributed as those are not covered by your Will, as well as other connected issues such as your real properties and insurance nominations. Distribution of assets upon death – or estate distribution – need not be difficult. Gain a better understanding of the estate rules governing common assets such as property, CPF savings, life insurance here.
First your Will. Not only does having a Will address how you want your assets distributed, it helps to provide certainty and avoid conﬂict for everybody, in particular, your family members. The following, although not fully exhaustive, are some of the advantages of having a Will:
- You decide what particular assets each beneﬁciaries will get, which avoids confusion and conﬂict when you are no longer around. Your beneﬁciaries can be anybody – your family, relatives, close friends or even charities. If you don’t leave behind a Will, the law will decide who gets what, which may not be what you want. Many of us would have heard of cases where family members have fought over the dead person’s assets. I believe you will want to avoid a similar situation.
- Further to this, you are able to give away speciﬁc items such as items of sentimental value or family heirlooms. If you don’t leave a Will, intestacy laws will apply. If your beneﬁciaries should then be picky over their speciﬁc share and ﬁght down to the last dollar of their entitlement, everything you have will have to be sold off and converted into money to be divided amongst them, including the items of sentimental value.
- There is no confusion and argument as to who your personal representatives will be (ie, those who will administer and manage your estate) as these people will be named clearly in your Will. Without a Will, the law will decide who will have priority to apply to manage your estate. This, however, opens the door for beneﬁciaries who have an equal right to apply to be an administrator, to potentially challenge the others for the position. This, unfortunately, can result in protracted lawsuits and unnecessary legal costs.
- Assuming you and your spouse should suddenly pass away, and your children are still young, who will be the ideal person(s) to take care of them? Do you know that this person could even be a friend and need not be a family member? If you, however, do not have a Will, the courts can only guess who will be the appropriate guardian, who will most likely be a family member, but whom may not be your ideal choice for whatever reason.
- If you have a Will, the rights and management of your estate rest with your personal representatives almost straight away upon your demise. In many cases, with the Will and the death certiﬁcate, your personal representatives will be able to claim some of your assets, such as your monies in the bank. Without a Will, a “letter of administration” will be required, which can take a relatively longer time to obtain.
- In doing up a Will, you can add appropriate clauses to provide for contingency situations where both you and your spouse pass away, or even where the entire family perishes. The law applying where both husband and wife pass away at the same time can be complicated. This becomes worse if you have children and the entire family perishes at the same time. You can provide in your Will, for example, that if you and your spouse should pass away in a common accident, your estate will not go to your spouse but to some other beneﬁciaries. This avoids the complicated rules above. This applies equally well for singles as you may travel or go on holidays with your loved ones (who will usually be your beneﬁciaries as well).
The above shows why everyone should have a Will. It is a misconception that Wills are only for the rich. In fact, the less you have, the less hassle your estate can afford to have. Having a Will helps you to avoid that. So take time to do up your Will.
How To Go About Doing It?
The ﬁrst step to knowing what to give, and to whom, is to prepare a list of all your assets. This will include your real properties and how your own it (whether as a sole owner, in joint-tenancy or tenancy-in-common ), your personal properties (such as your jewellery, family heirlooms, antiques, club memberships, and bank accounts), your investments, your insurances and your CPF monies amongst other assets.
The next step is to consider who your beneﬁciaries might be and to jot down or ﬁnd out their particulars. You will need to consider which particular property, item or share of your estate that each of them should be getting. It is increasingly becoming more common for people to give part of their estate to charitable organisations. This is encouraging as it shows Singaporeans really do have a heart for the needy. This also makes for ﬁnancial wisdom because, in many instances, people who leave too much behind for their beneﬁciaries may, in fact, be doing them a disservice as it can become a temptation for them to be complacent and live off their inheritance.
After considering the speciﬁc items, you should then consider how you may wish to leave behind your ﬁnancial assets. Most families will arrange it in such a way that everything will go to the surviving spouse, but in the event that both parents are not around, the ﬁnancial assets will then be divided among the children equally. You will however free to consider for yourself how your monies should be divided as each family’s situation is different. You may well decide that a certain amount or portion should be set aside for your children immediately after your death.
Each family is different. If you have full conﬁdence in your spouse, it may be neater to leave everything to him or her as that allows full ﬂexibility to decide how the assets should be used for the children. It is also entirely alright to leave different shares to your family right from the start.
Once you have thought through the above, you are ready to have your Will written. You can write your own Will. This is however not advisable as there is a certain ﬂow to how a Will should be drafted. Certain technical terms may also need to be included to properly reﬂect the wishes of the maker. You may save some money by writing your own Will, but if there are errors or conﬂicts due to drafting mistakes or improper execution, it could end up being a case of “penny-wise pound-foolish”. By then, you will no longer be around to rectify the problems.
Your CPF Monies
You should note that your hard-earned CPF monies can only be distributed via the CPF nomination form. This is regardless of what you state in your Will as your Will cannot override the CPF nomination. If you fail to make a nomination, your CPF monies will then be distributed according to the intestacy laws. This is even if you had made a Will. Do note that you can similarly nominate charitable organisations as beneﬁciaries of your CPF monies. Watch this video to find out where your CPF money goes to upon death.
Other than the above, a competent and good adviser should also help you review how you own your real properties as well as your insurance nominations. Whether you own your real properties in your own name, or as a joint tenant or tenant-in-common with another, can have consequences and which will affect how these are addressed in your Will. Similarly, you may also have made nominations to your insurance policies, and which may still take effect despite you having done up a Will. It is important to properly review these two areas as they are frequently overlooked. For example, you may have nominated your parents as the beneﬁciaries of your policy when you ﬁrst bought it before you got married and forgotten about it thereafter. You do not want surprises as to who will ultimately inherit these assets, especially if there is a real need for your spouse and children to inherit all of your assets. Such a review may even require you to restructure how you own your properties as well as redo or revoke your insurance nominations.
As much as having a Will is important, and which should be your starting point, you will need to also address the other areas of your plans. This will include making or reviewing your CPF nominations, as well as how you own your real properties and your insurance nominations. Only having done so can you take comfort that your estate will be properly distributed as you want it to be. Learn more about our estate planning solution here.
This is an original article written by James Huan, Former Head of Legal and Compliance at Providend, Singapore’s Fee-only Retirement Financial Adviser.
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