Borrowing from the movie starring Jack Nicholson and Morgan Freeman, the following lists a number of things you should consider doing to tidy up your estate plan, if not already. If you’ve been procrastinating, hopefully, this article will push you in the correct direction.
To Do No. I:
Take an Inventory of Important Physical Items
To start, think or go through the items that you own that may be of some value and make a list of all such items. The exercise in itself may help you think through whether there are any specific items that you may wish to leave for certain beneficiaries in the future. Some examples may include your home itself, jewelery, collectibles, vehicles, watches and so on.
To Do No. 2:
Take an Inventory of your Non-Physical Items
This should include intangible things you currently own as well as payments that may be made on your death. Some examples will include your various bank and investment accounts, trading and brokerage accounts, CPF accounts, life insurance policies, and all other existing insurance policies such as long-term care, home contents insurance, vehicle insurance, disability insurance, health insurances and so on.
To Do No. 3:
Make a list of all Outstanding Debts
Do remember that death does not cancel your debts. Your estate remains liable to pay off these debts. Therefore, make a list of all possible outstanding debts so that your estate administrator can clear them before eventually distributing what’s left to your beneficiaries. Your estate administrator can potentially become liable if they overlook this and proceed to distribute your assets. Such a list may include credit card accounts that may have outstanding balances from month to month, existing home loans, and any other debts you might owe. An idea could be to run a credit report from the Credit Bureau (Singapore) (www.creditbureau. com.sg) from time to time so that you can properly close any credit card accounts that you no longer use. Further to the above, do also be aware that if you have signed as a personal guarantor for anybody, this guarantee follows into your estate. Until such time as a replacement guarantor is found, your estate continues to remain liable as a guarantor. In any event, we should avoid being guarantors as far as possible.
To Do No. 4:
Make a list of all Organizations, Clubs & Other Memberships
This is both important and helpful. Firstly. this helps your estate administrator to suspend such memberships on your demise (hence avoiding further subscription and related fees), as well as neatly tidy up and close or transfer such memberships. Secondly, some of these organizations or memberships you belong to may provide complimentary accidental life insurance benefits which your estate and beneficiaries can benefit from. Additionally, it may help to include any other charitable organizations that you support or make donations to and let your beneficiaries know which are those that are close to your heart, in the event you leave instructions for monies to be donated or should they wish to make donations in honour of you.
To Do No. 5:
Update Insurance Nominations
With the revised insurance nomination framework, life insurance and annuities can be distributed via such nominations. As such, it is important that you contact your life insurance companies to ensure that your beneficiaries are updated and listed correctly, if you are so inclined to make such nominations. Just a reminder however that a preferred alternative may be to have a central controlling document (ie. the Will) to state how your assets should be distributed.
To Do No. 6:
Select a Responsible Estate Administrator
Your estate administrator will be responsible for administering your estate and following your instructions as set out in your will on your death. It is important that you select an individual who is responsible and can be in a good mental state to make decisions. This means that depending on your circumstances, your spouse may not necessarily be the best choice. Think about all suitable individuals and how emotions related to your death will affect this person’s decision-making ability.
To Do No. 7:
Write up a Will and do your CPF nominations
These are the standard documents to have for the distribution of your assets and helps prevent disputes among your heirs by providing clarity as to your wishes. Wills are fairly inexpensive and the CPF nomination is free. Don’t wait any longer if you do not have these two documents, which really are the minimum to have in place. Learn more about the importance of writing a will here.
To Do No. 8:
Review & Update Your Documents
You should review your distribution documents for updates at least once every three to five years and after any major life-changing events (marriage, divorce, birth of child, and so on). Life is constantly changing and your distribution wishes and inventory list is likely to change from year to year too.
To Do No. 9:
Send Copies of Your Asset List, Will (and even CPF nominations) to Your Estate Administrator
When your asset lists are completed, you should date and sign them and make a few copies as necessary. Give a copy to your estate administrator, a copy to your spouse (if not your estate administrator) and keep a copy for yourself in a safe place, perhaps together with your Will. This helps point your estate administrator in the correct direction in beginning to administer your estate. When your Will and CPF nominations are finalized, signed and witnessed, you may also want to make sure that your estate administrator gets a copy. This however also depends on your comfort level as this also means revealing such confidential information to your estate administrator immediately.
To Do No. 10:
Make a Lasting Power of Attorney
Incapacity can be as much of a threat to your financial well-being as death does. Fortunately, there are now tools in Singapore that can help us cope with this threat. You can now execute a lasting power of attorney and designate one or more persons (the “donee” or “donees”) who will make decisions on your behalf in the event that you become incapacitated, with instructions and directions as to what such donees can or cannot do. Such powers can extend to both your Personal welfare, as well as property and financial affairs. As this obviously involves making very important decisions, take the utmost care when choosing who should be appointed as the donees.
Now that you know what needs to be in place, the rest is up to you. Technology has fortunately made this easier. With almost everybody having a tablet or laptop, you can pull this out and start making your lists while watching your favourite TV program. You’ll be surprised how much you’ve accumulated over the years. The advantage also is it helps you get a firmer grip on your expenses.
This is an original article written by James Huan, Former Head of Legal and Compliance at Providend, Singapore’s Fee-only Retirement Financial Adviser.