Preparing for the Worst
Preparing for the worst in life is not just about having adequate life insurance. It is also about arranging your financial matters clearly while you’re still around so that your loved ones will not have to unravel or trace your assets and monies after you are gone. Leaving clear directions about how you want your estate distributed should also ensure that your estate is smoothly handed over to the ones you want to provide for.
If you are worried about becoming incapable of handling your own financial matters even when you are still alive, read about the Mental Incapacity and how you can pre-plan with a Lasting Power of Attorney.
Estate planning is about how you distribute your estate - the money and savings you worked hard for - according to your wishes after your death. It is about making sure that the people and causes you care about, receive some of your estate in the amount and manner you want them to.
What is a Will?
A Will spells out exactly how you wish to distribute your movable assets (e.g. bank deposits and insurance policies) and your immovable assets (e.g. flat, apartment, shop units or house) among the people or causes and charities you want to inherit these (your beneficiaries). It is a written document which will only take effect upon death and you can amend this at any point during your lifetime. Your Will needs to set out your wishes clearly. You may want to seek legal advice when you prepare your Will to ensure there is no question as to its validity. You may also wish to consider appointing a trustee to manage your assets for your beneficiaries, for example, if they are still young and incapable of handling large sums of money. But setting up a trust may not be cost-efficient unless your assets need to be managed and you are prepared to pay for the services of a trust company.
If you don’t have a Will...
In the absence of a Will, your assets will be distributed under Singapore’s intestacy laws (that is, under a fixed set of rules by the law). For examples of how the distribution may look like, please access the Public Trustee's Office website.
Intestacy rules are inflexible and it is possible that the prescribed way of allocation is not in line with your wishes. Your money may not reach the people who you feel truly need it most. For example if your spouse and children are financially self-reliant, you might have wanted to provide for your elderly parents, disabled or unemployed siblings, your grandchildren or even your grandparents.
Make a Will if the intestacy laws will not provide for other people or causes you care about. A Will can help prevent unnecessary complications after you have passed on.
The above information is prepared in collaboration with the Public Trustee's Office and the Life Insurance Association Singapore.