Kith & Kin

A Complete Guide to Estate Planning in Singapore

lawyer and client reviewing paperwork for estate planning in Singapore

Many Singaporeans put off estate planning for much later in life for several reasons — some think that this endeavour is only for the wealthy and that they do not possess many assets or wealth. Some others think it’s too costly to enlist the services of an estate planning lawyer, or that they simply lack enough knowledge about estate planning. While others simply prefer not to think about it, believing that there is still time for that in the future.

Unfortunately, life does not always unfold as planned. 

In the absence of an estate plan, the court will have control over the distribution and management of your assets, rather than your trusted appointee or members of your family.  Therefore, the estate planning process is not just about wealth preservation strategies and solutions. It is about giving you peace of mind for the future, knowing that your loved ones will be well-taken care of.

Estate planning definition

What is estate planning? Estate planning is the process of anticipating and arranging for the management and disposition of a person’s estate throughout his or her life, in the event, the person becomes incapacitated, and following death. In other words, it’s an undertaking that specifies how your assets are going to be managed and transferred when you become incapacitated or upon your death. 

Aside from the specification of the distribution of assets to your heirs, estate planning also involves strategies for charitable giving, estate, generation-skipping transfer, and other taxes. In Singapore, you don’t have to worry so much about the amount of estate duties payable — estate duties or “inheritance tax” is no longer payable for persons whose death occurs on 15 February 2008 and afterwards.

Estate Planning Singapore: the benefits of estate planning

After understanding the estate planning definition, you’ll be able to better appreciate the benefits of estate planning.

Primarily, you would want to be able to prepare for your own needs. Most people may think that an estate plan is something you need when you die, but many are unaware that it may also protect you and your possessions if you become incompetent or unable to make your own decisions.

After evaluating your cash flow requirements up to and including retirement, consider the insurance you may need if you become unable to provide for yourself. Additionally, consider appointing a Lasting Power of Attorney who will be able to make medical and financial choices on your behalf in the event of an emergency. Discussing your goals with trusted family members and friends will assist in ensuring that your wishes and requirements are met if you become unable to speak for yourself.

Other benefits of estate planning include:

  • Being able to dispose of your wealth in the manner that you wish
  • Minimizing transfer taxes
  • The ability to plan for philanthropic goals
  • The ability to protect your family’s wealth (through trusts, insurance and other limited liability entities in case your assets are challenged after your death)
  • Prepares the future generation for the wealth they are about to receive

What is an estate planning lawyer?

What does an estate planning attorney do and do you need one in your estate planning in Singapore?

Estate planning attorneys, also known as estate law attorneys or probate lawyers, are knowledgeable and licensed attorneys who have a complete understanding of the laws that govern the inventory, valuation, distribution, and taxation of your estate following your death. Along with being able to give you advice on the probate procedure, an estate planning lawyer can help with the following tasks:

  • Writing a will
  • Designation of your beneficiaries
  • Establishing a Lasting Power of Attorney
  • Recommending ways to reduce and avoid taxes
  • Determining whether to avoid the probate court process
  • Setting up any trusts you might need to protect your assets —  these could be for your own benefit during your lifetime, and for the benefit of your beneficiaries after your death

An estate planning lawyer will be able to ensure that your affairs are in order. With their expertise, you can be assured that all of your legal paperwork is valid and enforceable. Without legal counsel, you will leave your affairs to your family, who may not have sufficient knowledge on how to distribute your assets.

Estate planning tips:  know your tools

When conducting estate planning in Singapore, there are 8 common tools you can use for estate planning and wealth preservation strategies and solution:

1. Wills

In Singapore, if you die without a will, the rules of intestacy will determine how your estate will be distributed among your family. This will also be the case if you made a will that was subsequently declared invalid.

Your will should have a comprehensive list of your assets, debts and beneficiaries. To ensure that the stipulations on your will are valid, you need to make sure that you have an understanding of how circumstances such as guardianship, your funeral arrangements, and CPF would factor in after your passing. An equally significant decision is who becomes the executor of your will. This person carries the responsibility to implement the terms of your will, including paying your debts and taxes and distributing your assets.

2. Central Provident Fund nomination

Providing retirement earnings and healthcare for Singaporeans, the CPF is a mandatory social security savings scheme funded by contributions from employers and employees. If you are a working Singaporean, you and your employer make monthly contributions to the fund. These contributions go into 3 accounts that are designed to take care of your retirement, housing and healthcare needs.

Ideally, you would be able to withdraw your CPF savings at a certain age, or take advantage of monthly payouts when you reach 65 years old. In the event that you die, your CPF money will be dealt with in accordance with whether you have made a CPF nomination before your passing.

3. How immovable property is held

With the financial value that property carries, you would wish that it is correctly given to your loved ones upon your death.

If you are co-owning a property, the distribution of your share upon your death is dependent on whether the property is held under a joint tenancy or tenancy-in-common. In case the property is under a joint tenancy, the surviving joint tenant will inherit your share of the property. This means that your share cannot be bequeathed through will writing because your co-tenant is entitled to inherit the entire property upon your death.

If you want to be able to transfer your specified share in the property when you die, the asset must be held under a tenancy-in-common scheme.

4. Life insurance policies

Another tool you should consider in estate planning in Singapore is your life insurance. As with CPF contributions, you should name a beneficiary on your life insurance policy. If the nomination area is left blank, the insurance policy proceeds may be distributed through a Will or the Intestate Succession Act.

5. Lasting Power of Attorney

In Singapore, the Mental Capacity Act allows a person to make a Lasting Power of Attorney, wherein they appoint another person (donee) to make decisions on their behalf, should they find themselves suffering from impaired minds or from disturbances in the functions of the brain. If you prefer that decisions pertaining to your personal welfare, property and financial affairs are handled by a specific person, it would be best to draft a Lasting Power of Attorney in your estate planning.

6. Advance Medical Directive

When conducting your estate planning in Singapore, you may also want to consider the Advance Medical Directive Act (the AMDA) which authorises the use of Advance Medical Directives in Singapore.

An AMD is a legal document that you sign in advance to inform your doctor that you do not want him or her to use any extraordinary life-sustaining treatment to prolong your life if you become terminally ill and lose consciousness or the ability to exercise rational judgment.

AMD’s are only available to those who are mentally sound and at least 21 years old. This document must be signed by two witnesses who have no stake in your death. Furthermore, at least one of the witnesses must be your own physician.

7. Trusts 

A trust is a legal arrangement wherein a which a person or an institution, referred to as the trustee, holds the property or assets for the beneficiary. Because this is effective upon creation, a living trust enables you to manage your assets both before and after death.

Trusts can also provide tax savings because the assets placed within an irrevocable trust are not subject to estate tax upon distribution, so this is also one of your points to consider in estate planning in Singapore.

Learn more about the common reasons for setting up a trust.

8. Distribution of estates owned by Muslims in Singapore

Another consideration for estate planning in Singapore is the application of the Administration of Muslim Law Act (AMLA). Keep in mind that there are several main differences between Islamic and civil estate planning in Singapore, such as in the relevance of a deceased’s will, and the requirement to conform to faraid principles. 

Estate Planning Singapore

Understanding what is estate planning and why it is important allows you to prepare for your family’s future. Estate planning and wealth preservation strategies and solutions will help ease the burden from your family after your demise.

Estate planning allows you to assess beforehand whether in your situation and arrangements, can debt be inherited? Through these estate planning tips, you will see what impact will your debts incur on your estate, and on those who will potentially inherit it.

Here at Kith & Kin Law Corporation, we pride ourselves on combining our up-to-date knowledge on Estate Planning Singapore with our corporate conviction to provide the best legal advice based on our client’s personal circumstances.

If you are looking for more information on preparing your estate plan, schedule a discussion with us today.