Peter Wessel Zapffe once said that “Death is the most certain and the most uncertain event there is”. This tells us that we all have to meet our maker someday.
Estate planning is the process of anticipating and arranging, during a person’s life, for the management and disposal of that person’s estate during the person’s life and at and after death, while minimizing gift, estate, generation skipping transfer, and income tax.
A well thought through estate plan allows an individual to arrange and manage the smooth transfer of his/her estate to his/her loved ones after his/her demise. Specific instructions may be carried out via a will. If no will was made, his/her estate will be distributed to his/her surviving family members according to the Intestate Succession Act. The entire estate will go to the state with no relatives can be identified or found.
Upon death, assets of the deceased will be frozen. These include bank accounts, securities and properties under his/her name. The assests of the deceased will only be available for distribution after a Letter of Administraion or Grant of Probate is issued by the court.
When to make a Will?
You can make a Will as soon as you turn 21. You may amend and update your Will as you progress in life or achieve important milestones such as getting married, starting a family (or welcoming new members to the family), buying a property and starting/expanding your business etc.
Believe it or not, almost everyone has an estate. It basically comprises of everything you own. These includes your home, car, bank accounts, insurance policies, investments, furniture and personal possessions such collectibles, rarities, expensive musical instruments etc.
Tools for Estate Planning
Will – A legal document that contains instructions and intentions on how a person’s assets should be distributed after his/her death.
Trust – A fiduciary agreement that enables you to control how and when your beneficiaries receive your assets. Trusts usually avoid probate, thus your beneficiaries may access these assets more quickly than using a will.
Lasting Power of Attorney (LPA) – The LPA is a legal instrument that allows a person (donor) to authorise and appoint up to 2 donee(s) to make decisions regarding the doner’s personal welfare, affairs and properties in the event he/she loses mental capacity.
Advance Medical Directives (AMD) – An AMD is a legal document signed in advance to inform doctors that he/she does not wish for them to use any life-sustaining device and/or treatment to prolong his/her life, in the event that he/she becomes terminally ill and incapable of exercising rational judgement.
Central Provident Fund Nomination – CPF monies do not form part of your estate and thus cannot be distributed under a will or trust. Therefore, a CPF nomination will ensure that the nominated person(s) will receive all your CPF monies.