Estate Planning in Singapore
Estate planning is the process of planning how you want your estate (i.e. all the assets you have at the point of death) to be managed and transferred after your death. In Singapore, estate duties or “inheritance tax” is not payable for some persons in some cases. You therefore don’t have to worry about planning your estate in such a way as to try and limit the amount of estate duties payable.
The purpose of estate planning is to allow the individual to decide who his/her beneficiaries are and how much they will receive upon death.
Common tools you can use for estate planning in Singapore:
- Wills and testamentary trusts
- Central Provident Fund nomination
- Manner of holding of immovable property
- Life insurance policies
- Lasting Power of Attorney
- Advance Medical Directive
- Inter vivos trusts
- Distribution of estates owned by Muslims in Singapore
Benefits for utilizing Estate Planning Tools:
- Decide who receive what
- Faster distribution of assets upon death
- Overall lower costs to unlock assets
- Avoid ugly arguments and fights between family members
Will Writing in Singapore
A Will is both a love letter and an effective Estate Planning instrument. It is a legal document where you list down your wishes on how your assets are to be distributed. It also specifies the persons whom you entrust with the responsibility of taking care of your assets and the proper distribution to your beneficiaries upon demise. For parents with young children, they can also decide the best person to act as the children’s guardian in the unfortunate occasion where both parents are not around.
The Different Roles in a Will
There are a few people involved when a Will is written up, and they’re all important.
· Testator
A testator is just a fanciful name for the person who’s making the Will. He/she should be at least 21 years old and be of sound mind.
· Executor
After death, the executor is perhaps the most important figure. He/she would be someone who is named in the Will to handle all estate administrative tasks such as applying for the Grant of Probate, going to various financial institutions to withdraw money, pay off debts and liabilities, distributing assets, and more. The job of an executor is not easy and should be a reliable person.
· Trustee
Although the executor can also be the trustee, their roles may be different. The main role of the executor is to carry out the actions specified in the Will. As for the trustee, its role is to manage the estate and make proper distributions to beneficiaries.
· Beneficiaries
Beneficiaries are those who are named in the Will to receive your assets. They can be any person or organisation, such as Spouse, Children, Parents, Charities and more. There are no limits to how many beneficiaries you can have.
· Witnesses
Once your Will is written, the signing of it must be witnessed by 2 people. These 2 witnesses must not be beneficiaries or spouses of the beneficiaries and must be above 21 years old with sound mind.
· Guardian
Appointing a guardian can be important if you have young children who still need care and protection from a “parent”. This may not be too big of an issue if there’s a surviving spouse. However, it can be an issue if the testator is a single parent or when both parents die at the same time, the guardian will take care of the kids.
Trust in Singapore
A trust is best described as an arrangement whereby property is transferred from one person (the settlor) to another person (the trustee) who then holds that property for the benefit of specified people or objects (the beneficiaries). The lack of rigid formal requirements for the creation and operation of trusts, and the tremendous flexibility of trust instruments, make them uniquely useful for estate and succession planning.
Trusts in Singapore are regulated principally by the Trustees Act, which was significantly revised in 2004. Singapore’s trust law is largely based on English trust law and can be described as modern but, at the same time, conservative. It does not provide for a number of trust innovations, such as non-charitable purpose trusts, but with proper advice it can be used to accommodate most client needs.
Features of Trust in Singapore.
- Reserved powers of investment for the settlor, which permit a settlor to retain the power to make investment decisions;
- Anti-forced heirship provisions, which means that foreign forced heirship laws are not enforceable against a Singapore trust if the settlor had the capacity to transfer the property from the jurisdiction in which the transfer took effect; and
- A statutory duty of care is imposed on trustees in exercising their powers.
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