Personal Financial Planning plays an important part of our life. We plan many things in our life from Wealth Creation, Wealth Maintenance, Wealth Accumulation to Wealth Distribution. If we plan it right, our life will be less miserable as we spend within our means, have sufficient retirement and education funds for our children and have sufficient protection against our wealth. However, most people overlook Wealth Distribution and also give excuses that “why bother since they are no longer around to enjoy the wealth?”.
My argument to those people who do not pay attention to Wealth Distribution planning is “we have spent our whole life taking care of our spouse, our children, our elderly parents or even our favorite charities, we have the responsibilities to make sure they are being taken care off financially when we passed on.” We should not pass our liabilities to our family and we have to prevent our family enter into legal lawsuit over our own estates.
You can start planning your Wealth Distribution by writing a Will. The following are the 4 Pitfalls to avoid when writing a Will in Singapore.
#1 Valid Execution
There are many Will writing templates on websites and anyone can take up a pen to fill in the blank to write a will on their own to save cost. However, it is important to make sure the Will is recognised by the Singapore court as a valid Will, the wishes can be executed and not subject to contest. A poorly written and invalid Will equal to NO Will.
Accordingly to the legal system in Singapore, a Will is revoked if the testator (the person who writes the Will for wealth distribution) gets married or remarried. However, one’s Will will not be revoked if the person divorces. This means that one’s ex-spouse may still be entitled to the half’estate.
Not all the properties with joint names can be distributed in a Will due to Right of Survivorship. Joint properties, such as joint bank account or joint house ownership, are regarded as assets outsides of a person’s estate.
It is important to know whether one’s property is held under Joint Tenancy or Tenancy in Common. Only percentage owned by the deceased under Tenancy in Common can be willed away to their beneficiaries. Thus, always remember to check the status of all your real estates in Singapore before writing them into the Will. In other word, real estates under Joint Tenancy in the Will do not have any meaning at all.
#4 CPFs money
All money in CPF such as OA, SA and Medisave account cannot be willed away. Instead, CPF nomination needs to be done to distribute your CPF savings to your loved one. Else, your CPF money will be distributed according to Intestate Succession Act.
If you have used your CPF money to purchase a house or invest in shares, the distribution will be accordingly to Will or Right of Survivorship but not CPF nomination.
Estate Planning and Wealth Distribution is NOT as simple as just filling up with a template or forms. There are many more pitfalls if you don’t plan it properly and your estates will be leaked to pay unnecessary taxes, legal cost and miscellaneous costs.
It is advisable to seek professional advice if you have concerns over your estate distribution. Comment below to share your concerns and your thoughts, or send me an email firstname.lastname@example.org for private discussion.