Many people think of estate planning as something that only elderly people need to think about. The truth is estate planning is something that every adult should consider.
Apart from property and investments, insurance and other estate planning instruments are powerful tools that wealthy individuals use to protect their families.
With the right solutions, here are six problems that estate planning instruments can solve:
List of Services
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1. The immediate expensesList Item 1
When a person passes on, their assets will be frozen until the Grant of Probate is received. In the meantime, without your assets, your family will need a way to take care of themselves.
Common issues:
- Lack of an ongoing allowance to ensure that your loved ones’ living expenses are taken care of.
- Expenses eg. medical fees, income taxes, funeral expenses, mortgage loan and credit card debt needs to be paid
- Online accounts on social media, brokerage and bank accounts etc. will need to be closed to prevent identity theft.
Considerations
- How confident are you about your loved ones managing a huge sum of money suddenly?
- If you have minors, children with special needs, adult children who are unable to manage money on their own, who do you trust to manage the funds and look after your children for you?
- How long will it take for the probate to be processed before the assets can be distributed?
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2. Debts must be repaidList Item 2
Debts can quickly deplete the funds of any estate, especially if the debts were intended to be repaid over a longer period of time.
Considerations:
- What will happen to those insurance and investment plans that are under premium financing and leveraging facilities from banks? Who continues to service these loans?
- When the guarantor has passed on, will the family be held liable to pay the remaining liabilities?
- Does the family have the ability to service the loan?
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3. Unequal or unfair wealth distributionList Item 3
Illiquid assets such as properties of unequal value and locations are often causes of family disharmony.
Considerations:
- If one child is doing very well, while another is struggling financially, should I leave the property to the child who needs it more?
- If I own properties of unequal value and location, how do I ensure "fairness" among my children?
- If I have children living overseas, will there be complications if they inherit my Singapore property?
- If I have overseas properties, how will the inheritance taxes be taken care of?
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4. Conflict and uncertainty amongst shareholders of the business that the deceased ownedList Item 4
When the owner of a business passes, it can create succession and other problems.
Considerations:
- Will my business be able to continue without my leadership?
- Upon my demise, how do I ensure my remaining shareholders have the ability to buy the shares over from my spouse, if my spouse does not wish to continue with the business?
- If one of the shareholders has passed on, how comfortable am I with his/her spouse coming in to run the business together with me?
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5. Long-drawn or complicated probate process
Insurance with a proper nomination and set up under a trust structure can be used to entirely bypass the probate process.
Considerations:
- How do I ensure anonymity of a beneficiary from others?
- How do I ensure my beneficiaries have immediate access to some of my funds while waiting for the probate to be settled?
- If one of my beneficiaries becomes a bankrupt, can I withhold distribution?
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6. Sustainability when giving to charity
Estate planning tools allows you to control your charitable giving.
Instead of giving a single lump sum, the money can be restructured to ensure perpetual gifting to the charity.
Considerations:
- Would I prefer to give out the assets in a lump sum?
- Is there a way to ensure perpetuity (ie. allowing the charity I support to continue benefitting under my name for generations to come)?
All in all, proper estate planning can be very effective in overcoming many preventable issues and minimise family disputes.
We understand that all cases are unique. Instrument such as Wills, trusts, CPF nomination, life insurance, investments, Lasting Power of Attorney and Advance Medical Directive are often used as part of our solutions, Analysing and selecting the right tool will help solve the above 6 problems effectively.
