Yahoo Finance What Happens To People’s Assets When They Pass On?
Is making a will necessary?
Discussion about death is not something anyone enjoys. However, as the saying goes, there are two things in life that are certainties: death and taxes. Thus, not having a plan or even a discussion on how assets should be distributed after one’s death may actually cause more trouble in the future for your loved ones, be it your spouse or children.
What Happens In Singapore When Someone Passes On?
Before going to a company that does estate planning (i.e. a company that helps you with will writing and its execution), it is important to first know that Singapore has its own default Intestate Succession Act. That means in the absence of a valid will, the rules set on intestate succession will apply. Muslims in Singapore have a separate rule, which is in accordance to Islamic inheritance laws.
For non-Muslims, here are some things you and your parents need to know about the intestate succession act.
1. Spouse and children will split the inheritance
Contrary to what many may think, your spouse does not get everything in the event of your death. Rather, your assets are split equally between your spouse (50%) and your children (50%). If you have more than one child, the half that belongs to the children will be split equally among them.
However it is important to note that this does not apply to all your assets. A relevant example will be HDB flats that are commonly under joint owners (i.e. husband & wife). In the event one passes on, the share of the person will automatically be passed on the surviving joint tenant(s). What that means is that your surviving children does have a claim on your asset, but not the HDB flat that you own, which would go to your surviving spouse.
Also, should an absolutely horrible event happen, when a husband passes on while his wife is expecting, the yet-to-be born child is included as a beneficiary.
2. Absence of children, but with parents
This is worth pointing out. If you do not have any children, your assets are automatically split between your spouse (50%) and your parents (50%).
This is a lot trickier than what many people realized. To contextualise it, let’s assume that a person leaves the following assets upon his/her death.
HDB Flat (Joint owner with spouse)
One Private Apartment (Under his/her name, worth $1million)
$200,000 cash
The HDB flat will automatically be transferred to his/her spouse. However, the apartment and the cash will be split equally between the spouse and parents. That means each party will receive $600,000.
Obviously this split cannot be obtained without first selling the private apartment. Hence, it is not uncommon for assets such as property to be a forced sale in the event of death.
3. Absence of spouse, but with children and parents
If there is no surviving spouse, but children and parents are still around, then the children will automatically get everything. This will be spilt according to how many children there are.
It is interesting here to note that while surviving spouse do not get everything in the absence of children (i.e. they need to split this with parents), the opposite does not apply if there are surviving children and parents but no spouse. The children get everything in this instance.
We want to stress this because there are many of us who will want to take care of our aging parents in their old age. In the unfortunate event that both you and your spouse pass on suddenly, your parents will get nothing.
Other Scenarios
Absence of spouse or children:
Parents will get everything in the absence of any spouse or children.
Grandchildren can claim parent’s share:
If a parent has passed on, their children can claim their parent’s share.
Absence of spouse, children, parents:
Siblings will get equal portions.
Absence of spouse, children, parents, siblings:
Grandparents will take equal portions.
Absence of spouse, children, parents, siblings, grandparents:
Uncles and aunts will take equal portions.
Absence of any relations
Government will take everything.
Also Read: 3 Things To Take Note When Someone Passes Away
The Bottom Line
If you do not have a will, the state will have to decide how your assets are distributed and they will need to follow the abovementioned laws set out in place. It may not be fair from your point of view or your dependent’s point of view.
Naturally, estate planning is more important for those with more assets. However, as compared to the past, the generation who are in their 50s and 60s are starting to have a lot more assets under their name as compared to their parents generation.
Hence as Singapore continues to do well and our citizens accumulate assets, will writing and estate planning will start to become a very important topic for the majority of families in Singapore.
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