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Your estate includes everything you own – bank accounts, pensions, property, health care wishes, pets, insurance policies*, investments, etc.
Note – your estate does not include your CPF savings. These CPF savings are protected from creditors’ claims. Making a CPF nomination will allow intended beneficiaries swift access to your CPF savings. We’ll cover this in further detail later in the article!
* If the beneficiaries stated in your will and the nominees stated in your life insurance policy differ, the true beneficiary will be determined using the nature of the nomination in the life insurance policy. If the nomination was a trust nomination (irrevocable nomination), the nominees stated in the life insurance policy shall receive the proceeds. If the nomination was a revocable nomination and the insurance company had received written notice signed by the policyholder, the nomination will be treated as revoked, and the beneficiaries stated in the will shall receive the proceeds.
The net value of your estate takes into account both your assets and liabilities, plus fees and expenses, and the type of property owned (if applicable).
Assets - resources that you own and can potentially supply future economic benefits. They can increase your net worth and can help you achieve your financial goals. Examples include cash, property, land, stock, and intellectual property. Make a list of all of these, then check it over again. It is important to update the list when your assets change.
Liabilities – debts or obligations which you need to fulfil in the future. These can come in the form of money owed, goods needed to provide, or services required. They come to light from past transactions and must be settled with assets.
When it comes to property, the nature of ownership will determine the share of the asset you’re able to hand over:
An estate plan involves planning how you would like your estate to be distributed after you pass away. It is important to plan for the time when you are no longer able to care for your loved ones, no matter what your age or net worth. Once you’ve put a plan in place, it’s important to update it as your lifestyle changes regularly.
An estate plan helps you decide:
One of the key aspects of an estate plan is your will, which assists you in distributing your estate. Your will is a written document and can be altered at any time. If you are unsure as to whether your will is valid, it may well be worth seeking professional advice on the topic.
Unfortunately, end-of-life planning is not on the agenda for many young people. One common misconception is that you only need to do it if you’re rich.
If you have dependents, such as children, then yes, we’d consider it essential for you to have a will. Wills, just like pensions or insurance, are often associated with the later stages of adulthood; however, it is in your best interest to be prepared from a young age. Your will can be as detailed as you like.
Writing a will means that your estate is not distributed under Singapore’s Intestate Succession Act after you pass away. Take note of these rules, as they may not align with your interests!
Note – the Intestate Succession Act does not apply to Muslims who follow the Islamic inheritance law. Muslim estate beneficiaries must apply to the Syariah Court for an Inheritance Certificate to demonstrate each beneficiary's share. Following issuing an Inheritance Certificate, you may need to obtain a Grant of Probate or Letters of Administration. Muslim estates can be distributed through a hibah or nuzriah. Only a third of a Muslim's estate can be handed over through a will to individuals not entitled under the Inheritance Certificate.
We highly recommend writing a will, as the process under the Intestate Succession Act can take a lengthy amount of time and cause all sorts of grief and conflict amongst surviving family members.
You may find it tricky to answer the questions above, which is understandable. Your will can be changed anytime, assuming you are of sound mind.
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As mentioned previously, your CPF savings are not part of your estate and are not covered by your will. If you wish to prevent your CPF savings from being distributed under Singapore's Intestate Succession Act or the Islamic inheritance law, you must make a CPF nomination.
There is no limit to the number of beneficiaries you can name, and they can be either a person or an organisation.
Like a will, your CPF nomination will state the apportion and allocation of your CPF assets between your beneficiaries. The beneficiaries can receive funds through a one-time cash payout (via cheque or GIRO) under a cash nomination, via a CPF account under the Enhanced Nomination Scheme (ENS), or through monthly payouts under the Special Needs Savings Scheme (SNSS). Like a will, your CPF nomination is changeable at any time.
Bear in mind that you must be 16 years old or over, as well as being of sound mind, to make a CPF nomination.
For more information on the CPF Nomination Form, click here.
You must:
Trusts are an alternative way to give out your estate. Trust funds enable you to be in charge of how your estate is used after certain situations, such as death. The common assumption is that you only set up a trust if you are wealthy, but this is false. A trust fund is for everyone. You can choose from a variety of types to best suit your needs.
The trust is created by a settlor – which is an individual accompanied by their lawyer. The settlor can create the trust when they are alive (living trust) or deceased (will trust/testamentary trust). The settlor decides how their assets will be passed on to the trustees, who have legal ownership to hold onto the assets before releasing them to the trust beneficiaries.
The main difference between the two is that a will is carried out upon the person's death, whereas a trust is usually effective immediately after it is signed. Secondly, a trust gives you control over exactly when your beneficiaries receive their allocation of your estate for your estate to be put to best use.
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All trusts will fall under at least one of these categories:
Under a living trust, the settlor can use their assets while alive before they are handed down to a beneficiary (via a trustee) following their death. This type of trust will protect your assets from creditors if you go bankrupt. A living fund offers a lot of control and flexibility compared to other trusts, however, do tend to cost more. On the contrary, testamentary wills set out how an individual’s assets will be distributed (specified in their will) upon the settlor's death. This type is advised if you do not wish your beneficiaries to receive everything at once, as you can state how often the estate will be distributed.
I.e. whether you can change the details of the trust when circumstances change during your lifetime. The majority of trusts are revocable.
A discretionary trust allows the trustee to deviate from the details of the trust, which can be beneficial as the future is always uncertain. For this reason, fixed trusts are unpopular. Under both types, there remains a fiduciary duty to act on behalf of the beneficiary's interests.
A trust will be funded or unfunded (or standby) by the trustor during their lifetime – meaning an unfunded trust contains nothing more than an agreement, plus potentially the minimum amount, however, can be funded upon a trustor’s death.
As part of the process of putting an estate plan together, you’ll have identified the things in life that mean the most to you. This process may have you wondering, does my insurance coverage protect the things in life that mean the most to me?
An insurance trust is an irrevocable trust with insurance policies established as an asset. Once the insurance policy, usually life insurance, is put in the trust, it is no longer owned by the insured individual. Instead, it is managed by the trustee, i.e. the trust company. Setting up this type of trust exempts the assets from your taxable estate.
It's an unlikely scenario, but possible. As mentioned in the will section, failure to have a guardian or trustee appointed to manage the distribution of your assets will lead to your estate being distributed under Singapore’s Intestate Succession Act.
As a beneficiary, the income earned from any income-producing asset of a trust is taxed at your personal income tax rate.
The options vary, depending on your needs. For the full service, including trust writing and start-to-finish implementation, consider independent trust companies.
Consider approaching a financial advisor for smaller needs!
Have you planned for the unlikely event of losing your own mental capacity?
Failure to plan for losing your mental capacity can cause all sorts of difficulties for family members, so it is important to plan ahead.
Aside from writing a will and setting up a trust, another way to transfer your estate is through the lasting power of attorney (LPA). An LPA is a legal document that lets you (the donor) appoint one or more people (donees) to act on your behalf about your personal welfare, financial affairs and property in the event of your losing mental capacity.
Generally, to make an LPA, you must be aged 21 or over.
To be valid, you must register an LPA with the Office of the Public Guardian (OPG). In Singapore, LPAs are becoming increasingly popular. The number of registered LPAs has increased dramatically recently, from 2,681 in 2014 to 152,000 in 2022.
As mentioned earlier, not having an LPA can cause all sorts of difficulties for your loved ones. Your loved ones will not have an automatic right to make legal decisions on your behalf. One of your loved ones will have to go through Court to become your deputy, a process that is more time-consuming and expensive compared to obtaining an LPA!
In Singapore, you can grant your donees general or specific decision-making powers.
LPA Form 1
LPA Form 2
Once you have downloaded an LPA Form, you will need to:
Want to start? Download the LPA Form here.
You could consider an Advanced Medical Directive (AMD) if you believe you would not want life-sustaining treatment if you become terminally ill and unconscious. To obtain one, you need to be over the age of 21 and mentally sound. This is a completely voluntary decision.
Learn more about AMDs here.
ESTATE PLANNING. COMPLETED. ✅
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