Estate planning in Singapore involves knowing and planning how you want your assets (at the point of death) to be managed and distributed to your loved ones.
Estate duties or inheritance tax is not payable in Singapore for deceased who passed away after 15 February 2008. Hence, you need not be concerned about “tax planning” when doing estate planning in Singapore. The following are estate planning tools that may be useful to you:
1. Wills
You may wish to write a Will. Wills are legal documents which contain written instructions on how a person’s assets should be distributed after his/ her death. Without a Will, your assets will be distributed according to Section 7 of the Intestate Succession Act.
Before preparing your Will, you should:
1. Identify the assets which you wish to distribute to your loved ones.
2. Identify the beneficiaries whom you wish to distribute your assets to.
3. Identify your executors (i.e. people who will administer your estate).
Executors are the people who will apply to Court for a grant of probate (i.e. a Court order giving them the power to distribute the deceased’s assets). Executors should be above the age of 21. A trust can also be created under your Will, for the holding of certain property on trust for a beneficiary (such as a minor beneficiary).
2. CPF Nomination
CPF funds are not distributed by way of a Will. The person you have nominated as beneficiary to your CPF funds will receive the CPF funds after your demise. CPF nomination must be made to the CPF Board.
3. Joint Tenancy Vs Tenancy-In-Common
If you hold a property with a co-owner, there is a difference between holding it under joint tenancy and holding in under a tenancy-in-common arrangement. Under a joint tenancy arrangement, both parties hold the property as a whole. In the event that one party were to pass away before the other, the survivor will inherit the property automatically. In a tenancy-in-common arrangement, parties hold the property in terms of percentages. Hence, party A could hold 40% of the property and party B could hold 60% of the property. Should party A pass away, party A is able to distribute his/ her 40% share by way of a Will.
It is possible to convert the manner of holding the property if you change your mind.
4. Life Insurance Policies
Similar to CPF monies, you should nominate a beneficiary in your life insurance policy. In the event that the nomination field is left blank, you may be able to distribute proceeds from your life insurance policy by way of a Will or via the Intestate Succession Act.
5. Lasting Power of Attorney
What if a person is alive but loses his/ her mental capacity to make decisions? More people in Singapore are choosing to do up a lasting power of attorney which allows a person (i.e. the donor) to appoint and authorize another (i.e. the done) to make decisions on the donor’s welfare and properties in the event that the donor loses his/ her mental capacity.
6. Advance Medical Directive
Having an advance medical directive allows you to make a pre-decision and inform your doctor that you do not wish to undergo any extraordinary life-sustaining treatment to prolong your life in the event that you are terminally ill, unconscious and unable to exercise rational judgment. If you wish to execute an AMD, you should be above the age of 21 and mentally sound.
7. Trusts
You may also create a trust, where you (the settlor) place your property under the trust and appoint a trustee to manage the property for the beneficiary. A trust is common when you are leaving assets to children under the age of 21. You can stipulate how the property is to be used by your beneficiary (e.g. for educational or healthcare purposes).
You should consult an experienced estate lawyer in Singapore if you have more concerns about estate planning in Singapore.
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