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How to plan for the smooth transfer of your assets when you go
By Thusitha de Silva
People tend to put off getting a will drawn up. Death can come suddenly, though, so it is important to do one up to ensure your assets go where you want to them to once you are no longer around.
If you don’t have a will when you die, Singapore’s Intestate Succession Act kicks in. This Act lays out how assets would be transferred in the presence or absence of a spouse, children, parents, grandparents, brothers, sisters, uncles and aunts. If a person dies alone, all assets go to the State. The Act does not apply to Muslims, who have their own set of rules subject to Islamic inheritance laws.
In Singapore, you can do a will if you are over 21 years of age. It is actually possible to write your own will. First, you have to think about who you want to be the executor of your will. It is usually someone close to you whom you trust. In addition to stating where you want your assets to go, you also have to list your liabilities, like outstanding home or car loans or credit card debt. Money will be drawn from your estate to pay off your liabilities first before being distributed to your intended recipients.
Complications and costs of will writing
The more assets you own and the bigger your family, the more complicated the writing of a will can become. As such, it is typically recommended that you get a firm to write your will. There are several will-writing companies in Singapore, some affiliated to law firms while others are not.
The cost of writing a will depends on the time spent doing it. The more clauses you include, the longer it takes and the more expensive it gets. If a lawyer is hired, it will cost even more because the lawyer has to be compensated for time. Some will-writing firms also offer custody services for your will, to ensure that it is kept in a safe place. The will can only be accessed by the executor of your will after you die.
It is important to note that an individual has to possess the mental capacity to sign a will. The person has to know and understand what is in it. For instance, if someone is clinically certified to be suffering from Alzheimer’s Disease, they are considered to be lacking the mental capacity to do up a will.
Such problems can be overcome if the person does a Lasting Power of Attorney (LPA). An LPA is a legal document in which a person voluntarily appoints another person to act on his behalf should he lose his mental capacity later in life. LPAs are done by perfectly healthy people as a precaution, as one can never truly know what lies ahead.
What’s left behind
Common assets that an individual may leave behind include bank accounts, fixed deposits, stocks and shares, bonds and insurance policies. Singaporeans also broadly own Housing & Development Board (HDB) flats and have Central Provident Fund (CPF) monies. The HDB and CPF each have specific rules that relate to the transfer of assets in the event of death. For an HDB flat, the immediate family members typically become the beneficiaries in the case of a death without a will. As for CPF monies, distribution of funds would come under the purview of its Nomination Scheme.
The aftermath of a death can get complicated if a will has not been written. Even if you write a will at a younger age, it can always be rewritten or updated further down the track. As long as your mental capacity is intact, you can always do this. If a will is not written, there is the real chance that the scramble for a piece of your nest-egg after you die can become ugly.
Many people have arguably seen this even within their immediate families. If the flows of inheritance are not made clear in a will, some if not all members of the extended family will take a punt for his or her share. That is human nature.
Thusitha de Silva is a financial journalist based in Johor Baru.
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