WHEN YOU’RE GONE
Estate planning means your loved ones can be well cared for.
N o one likes to talk about death and illness, but these can occur suddenly. With estate planning, you can ensure your loved ones’ financial security after you’ve passed on. Also, if you’re no longer able to make decisions because of illness or incapacity, you can make sure that your needs are taken care of and your wishes, honoured.
“My husband was sick for a year before he died, and it was extremely stressful for us to think about estate planning while he was undergoing difficult medical treatments and I was caring for him,” says Winnie Chan, 58, whose husband passed away from cancer earlier this year.
Justin Ling, a financial consultant with Prudential Assurance Company Singapore, says: “It’s best to get involved in estate planning with your spouse, so both of you are on the same page and understand the intent behind every decision.”
Each person has different needs, but these are the main areas you should consider:
Create a Will
It’s the simplest form of estate planning – you can pick your executor (the person who will administer and distribute your assets), decide what to leave to whom, and appoint someone to look after your children in case something happens to you and your spouse.
If you die without a will, then the Intestate Succession Act – a sort of default will – kicks in. But it isn’t foolproof and may lead to undesirable situations, like family conflict.
“Without a will, your property, assets and cash can be inherited by a beneficiary you may not intend to give them to. For example, if you are separated from your husband and you pass on without a will, half will go to him and half to your children,” says Bernard Doray, director of Bernard & Rada Law Corp. “If you also have elderly parents who need financial support for medical expenses, they may be left destitute if you haven’t made adequate provision for them.”
Remember to update your will as you begin different stages in your life. The will that you made before you got married is no longer relevant if you now have three children in need of care. Take note that a new marriage will revoke your existing will, so if you don’t create a new will after remarrying, the Intestate Succession Act will apply if you pass on.
“Once you have done your estate planning, do not leave it on autopilot mode. Monitor and review your plans at least once every two years to take care of your changing circumstances,” advises Anne Tay, senior manager from Prestige Raffles Group representing Manulife Singapore.
Making a will is especially important if you have children below the age of 18 – it’s the best way to transfer guardianship of them in case you and your hubby pass on together. If there is no will, the court will try to appoint someone like the most suitable next of kin to be the guardian. However, there are cases where the High Court or Family Court can appoint itself to be the guardian.
You should also name trustees who will manage your children’s share of your estate – they can be the same people you appoint as guardians. Legally speaking, a child under 18 years old is considered a minor, so a guardian must be appointed. But if you have special considerations as to when you want to disburse the monies to your child after the age of 18, you must consult a lawyer to have that provisioned for in the will.
Check Your Insurance Beneficiaries
Life insurance policies are particularly important when you have more debts than assets. Your loved ones can use the payout from the policies for their daily needs and other urgent expenses.
By law, creditors have first rights to your estate. However, with life insurance policies, you can circumvent this by nominating your spouse and children as beneficiaries of an irrevocable trust – which guarantees that the proceeds from the insurance policies will go to your beneficiaries. Creditors will not be able to lay claim to them.
“An insurance policy is an important vehicle to consider when doing estate planning because it helps to provide the necessary liquidity as quickly as possible to your loved ones,” says Anne.
Insurance claims are usually paid out within seven working days. This is helpful because when a person dies, all his assets will be frozen