Assets are accumulated in multiple ways, funds created via insurance, savings as you work, increased in property value over time, so what is next? We take pride to share with you our L.I.F.E model to Estate Planning: IDENTIFY you intentions, LEGALIZE your intentions for your love ones, especially your children. FINANCIAL consideration of your estate. Ensure EXECUTABLE Estate Plans.
The 9 pointers below will serve as a reference for your consideration when making your will.
1. Appointing Executor and Trustee
Most of us would choose our spouse to be our preferred executor however, more often than not, they may not be the ideal candidate for the job. Take a step back and think about the emotion trauma that our spouse may be going through, and evaluate their suitability as an executor. To add on to the point of suitability, in situation of common disastor, the executor may no longer be valid. Here is when a corporate professional executor can help solve these issues.
2. Appointing Guardian
Surviving spouse are default guardian, however, the testator has the right to appoint another guardian to act jointly with your surviving spouse, particularly necessary for divorcee. In cases where grandparents are chosen as guardians (especially in the event of common disaster), appointing substitute guardians is definitely a prudent way to ensure your child will be taken care of by someone of your choice and not by chance.
Do remember though, to set aside funds for guardians in the form of monthly maintenance fee e.g. till youngest child graduates.
3. Comprehensive Medical Insurance Planning for Dependents
Ensure that all your dependents are covered by medical insurance plans that reimburse 100% on medical bills so that you do not need to set aside funds for dependents’ medical/ illness purposes. The government approved medical insurance plans (whole of life) have premiums that are definitely manageable. Getting insurance policies that provide for Critical Illnesses coverage for children are the next best bets as they provide a lump sum financing upon unforeseen diagnosis of critical illness. Such plans can help protect and conserve your estate from high and continuing expenses.
4. Children Pocket Money, Education Funds & Gifts
Specify the amount required in different schooling stages: primary, secondary and even tertiary education
Child’s monthly education provision: childcare, school fees (esp international/ independent school), univeresity tuition fee & boarding school etc.
Child’s Birthday gift
Child’s Christmas gift
Child’s graduation gift
Child’s wedding cash gift
One off downpayment for 1st house
One off payment for business set up
Balance Distribution (give in equal portions over a period eg at age 30, 35 and 40, rather than lump sum at age 21.)
All amount can be adjusted for inflation.
5. Planning for Your Spouse, Parents and Siblings
Do you want to maintain your spouse’s standard of living while taking care of the children full time? Taking care of their retirement needs, medical insurance needs? Ensure that your parents or even your siblings are taken care of, especially those with special needs?
6. Review Your CPF & Insurance Policies Nomination
Have you been reviewing and updating your nominations? Nomination for your insurance policies and your CPF monies can help improve liquidity of your estate as this method of property transfer bypass the probate process. However nomination may fail for several reasons. Remember to specify a distribution for residual estate to capture some of your assets should nomination fails.
There are 2 basic types of ownership for property in Singapore, Joint Tenancy and Tenancy-In-Common. The methods of property transfer for the two are very different. Joint Tenancy operates under the principle of survivorship, just like in the case of joint bank accounts. Tenancy-In-Common ownership means 2 or more persons owning a property in distinct shares, shares can be disproportionate. Co-tenants are free to be divested of his property interest by sale, gift or Will.
In recent years, properties in Singapore are highly sought after. Property owners who own multiple properties in Singapore can consider setting up a Property Trust to house them for your children and maybe even your children’s children.
8. Common Disaster Considerations
In the event of common disaster, timing of death aren’t usually identified. In this case, the older will be deemed to passed on first. His estate will go to the younger spouse if there is no proper will. Her total assets may then go to her parents, and the older spouse’s parents will not received anything!
9. Liquidity Consideration of Your Estate
There are 3 ways in which asset transfer at death can bypass the probate process, under Principle of Survivorship, by contract (nomination) and by Trust. This can help solve some of the cash-flow problems within the family while the probate process in on going.