1. My estate is too small.
  2. It is too expensive.
  3. I do not have enough time.
  4. I am not certain about what I want to do.
  5. I view planning negatively because it is indirectly related to death.
  6. I am too busy.
  7. I do not bother to plan my finances at all.

Objective of Estate Planning

When you develop a proper estate plan, your family members would have been spared the frustration and the additional cost of court battles just to divide your estate. So your objective is to ensure the maximum value of the deceased’s assets and wealth is distributed according to his or her genuine wishes. You want to provide for ease of management and administration of estate, care of immediate family e.g. guardianship, provision for children and charity. How then would you develop an estate plan to ensure that your beneficiaries get the maximum value from your estate?

You can adopt the following strategies:

  1. Minimise Your Estate Duty

Giving gift while he is alive or setting up a trust or a hold company.

  1. Minimise Administrative Cost and Inconvenience

Writing a will is a critical component that will shorten the court procedure and hence reduce the administrative and legal cost.

  1. Appoint A Capable Executor to Manage Your Estate

Appoint someone who is trustworthy, financially competent and have you and your beneficiaries’ interest at heart to administer and distribute your estate upon your death.

  1. Appoint Trustworthy Individuals As Guardians

In case where some of your beneficiaries are minors, you need at least two legal guardians. The role of the guardian is to hold your assets, invest or use any financial resources in the estate for the benefit of these minors.

There are five procedures to develop a sound estate plan:

  1. Ascertain How Much Assets You Own
    1. Itemise your assets.
    2. Ownership of assets.
  2. Determine How You Want Your Estate Distributed 
  1. Decide in the Means of Transferring Assets through:
    1. Gifts.
    2. Set up a trust.
    3. Specify the beneficiaries such as life insurance policies, CPF saving and annuities.
    4. Right of survivorship – for joint ownership of property and joint bank account – ownership of assets automatically goes to the surviving owner.
    5. Will.
    6. Trust.
    7. Intestacy Law.

There are many other technical aspects of estate planning that are beyond the scope of this article. Both financial planning and estate planning need to begin at an early age. They are dynamic in nature and having to procrastinate in either area is poor stewardship.

Questions:

  1. What are the reasons given for not planning?
  2. What strategies can I adopt in estate planning?
  3. What procedure do I need to develop in order to provide a sound estate plan?

 

~ Adapted from Personal Financial Planning by Koh Seng Kee, Fong Wai Mun

Week 48 – Estate Planning