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Gladys Tan

Financial Consultant

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What Exactly is Estate Planning? + Answering More Common Questions

"What exactly is Estate planning?" ๐Ÿค”

When I share with people that I can also help with Estate Planning, many come back to me with this question.

So I thought to put together a series of FAQs on Estate Planning for us to have some understanding towards this topic.

What is Estate Planning?

Estate planning is a process of organising our assets and preparing for the transfer and distribution of those assets to our beneficiaries after death.

It involves the creation of a plan that seeks to make the process efficient and minimise the exposure of our wealth to unnecessary expenses and taxes.

But is it for the event of your demise only? Not necessarily.

Estate planning also involves considering and preparing for the possibility of incapacity during our lifetime.

The purpose of Estate planning is to ensure that our wishes are carried out and our assets are protected. Estate planning can be complex and it is important to seek the advice of a qualified Estate Planner to ensure that our plans are properly structured and executed.

What's the ideal age / stage that one should start Estate Planning?

As clichรฉ as it may sound, it is always a good time to begin Estate Planning.

No matter if we are the breadwinner or a fresh graduate in our first job, there are good reasons to consider what will happen to our familyโ€™s financial health after we walk out of life.

However, many people delay creating an Estate Plan because they do not feel like their current situation calls for it.

But it is precisely because we do not know when we need it, all the more our Estate Plan should already be in place.

๐—ช๐—ต๐—ฒ๐—ป ๐——๐—ผ๐—ฒ๐˜€ ๐—ฎ๐—ป ๐—˜๐˜€๐˜๐—ฎ๐˜๐—ฒ ๐—ฃ๐—น๐—ฎ๐—ป ๐—•๐—ฒ๐—ฐ๐—ผ๐—บ๐—ฒ ๐—ก๐—ฒ๐—ฐ๐—ฒ๐˜€๐˜€๐—ฎ๐—ฟ๐˜†?

Consider the following life events as signs to start (or update) your Estate Plan:

๐ŸŒŸ Setting up of Saving & Investment accounts

๐ŸŒŸ Property Ownership

๐ŸŒŸ Change in martial status

๐ŸŒŸ Starting a family

๐ŸŒŸ Inheritance of money or other assets

๐ŸŒŸ Travel (especially before big trips)

The key is to build Estate Plans that change as our circumstances change.

If you have already done up your Estate Plan, please make sure you also review it every three to five years.

While it is not necessary to constantly change these documents, reviewing them periodically helps us to carefully evaluate relationships, finances and the emotional dynamics of our families.

Fact or Myth - Estate Planning is only for the wealthy

Is estate planning for people with properties or a lot of assets? Is it not for the common working person?

If youโ€™ve had the chance to read my earlier post, youโ€™d know that the above is a myth.

Estate Planning is about putting a plan in place that protects us and everyone we love, regardless of wealth.

We all can benefit from Estate Planning, as it can help us:

โœ… Protect our assets from creditors, lawsuits or other claims

โœ… Minimise expenses associated with the transfer of our estate

โœ… Ensure our assets are distributed according to our wishes

โœ… Plan for the care of minor children and/or dependents

โœ… Appoint a trusted individual to manage our affairs in the event of incapacity

Consider Estate Planning as part of your overall financial planning strategy. Let us ensure that the wealth we spend decades building, reaches the hands of people we trust, love and care about.

What happens when a person passes without a Will?

In Singapore, without a valid Will, the deceased person's estate will fall into intestacy and the distribution will be made according to the intestacy rules set out in the Intestate Succession Act.

This means that the government will determine how the assets will be distributed, and it may not be in accordance with oneโ€™s wishes.

This can lead to unfavourable consequences, such as:

โŒ Assets being distributed to unintended beneficiaries

โŒ Beneficiaries incurring unnecessary taxes and other expenses

โŒ Disputes among beneficiaries

โŒ Delays in distributing the assets

This is why it is important to also work on an Estate Plan such that our assets and loved ones are protected. Estate planning can help you take control of your legacy and ensure that your assets are distributed according to your wishes.

Is will writing the only thing I need to do for Estate Planning?

While writing a Will is an essential part of Estate planning, it is not the only thing you need to do.

Estate planning involves decisions on how an individual's assets will be preserved, managed, and distributed after death.

Estate planning also takes into account the management of an individual's properties and financial obligations in the event that they become incapacitated.

Hence, there are other important tools we need to consider as part of our Estate plan.

For example,

โœ…The use of a trust to provide for the needs of vulnerable family members.

โœ…Writing a Lasting Power of Attorney to appoint one or more donee(s) to manage our affairs and make decisions on our behalf in the event of mental incapacity.

โœ…Making a CPF nomination so that our nominees can claim their share quickly and conveniently.

The above is not an exhaustive list. It is important to understand how each tool works before incorporating them into your Estate plan.

What are the different ways I can distribute my estate or assets after I'm gone?

Not sure how to distribute your Estate?

Many people would imagine distributing their Estate to their beneficiaries in a single episode, typically immediately after probate.

That can be ideal as well especially if you know the beneficiary to be capable of managing the assets and/or monies.

But what if the beneficiary is a minor? Or someone who may not be the most equipped with managing monies, especially those of larger sums?

This is where you can consider the following distribution methods as well:

1๏ธโƒฃ Delayed - Giving over a period of time and/or upon a certain age. For example, instead of giving a million dollars to my parents, I may want to consider giving them a smaller amount each month, over a period of time instead.โ€จ

2๏ธโƒฃ Conditional - Giving on the condition that certain circumstances are met. For instance, I may want to give $50k to my daughter if she wishes to start her own business.

Each of the method above is meant to either mitigate certain risks and/or lead the beneficiaries to certain outcomes.

Can you see what they might be? :)


Got more questions about Estate planning? Feel free to reach out

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