Why make an estate plan? The process can seem tiresome and expensive. To the uninitiated, the complex vocabulary used can also be confusing and unfriendly to laymen. The truth is, however, that estate planning can be an incredibly useful tool for anyone, regardless of their financial background.
In Singapore, passing away without an estate plan can cause immense domestic strife in the family, as well as trap your estate in probate for years. However, many individuals neglect to create wills, trusts, and other financial directives that will secure the future of your estate. By formally stating your financial goals in an estate plan, it becomes easy to determine what will happen upon your inevitable passing. This ensures that your loved ones will be well taken care of, and pass your inheritance to the rightful heir.
Here are some of the reasons why individuals opt for estate planning in Singapore.
Protect Your Loved Ones
Death is two things: inevitable and messy. It’s hard for your loved ones to figure out what happens after you’re gone, but you can make it a lot easier by making an estate plan. This removes the responsibility and pressure on your loved ones to manage the estate by creating a clear plan for what needs to happen, and prevents infighting among them for parts of your estate. With an estate plan, everything becomes pre-determined.
Another way to protect your loved ones through estate planning would be the ability to come up with a financial plan to protect their interests. Heirs can often become financially overwhelmed once they receive their inheritance; with an estate plan, you can determine how much they receive and when in order to curb excessive spending.
For adult beneficiaries, an estate plan can shield their inheritance from external pressures, creditors, or even their spouse. In this way, you can protect your beneficiary’s inheritance from an abusive partner who could waste it or seize it as part of a divorce settlement.
Keep Your Assets Safe
Estate planning is a great way to protect your assets from unexpected events, such as a lawsuit or a divorce. Depending on the type of trust established, estate planning can help to shield your assets from such agreements or negotiations. This would be followed by a handoff to the rightful heir when the time comes.
You can also prevent the depreciation or taxation of your assets by making an estate plan. Married couples can decrease their estate taxes, or even eliminate them entirely! This keeps their wealth safe for their beneficiaries, and reduces the inheritance tax burden on them.
Smoothen The Process
Dying without a will can have adverse effects on the division of your estate. In Singapore, this subjects your estate to intestate law, which divides your property amongst your living relatives in a certain priority order. In this situation, estate planning allows for greater flexibility in the distribution of your assets, ensuring that the right things go to the right people at the right time.
Avoiding probate is one of the most common reasons that individuals seek out an estate planning attorney. In most jurisdictions, the probate procedure takes at least seven months to enable creditors to file claims. The probate procedure may be costly, and legal fees can lower the amount left to your loved ones. As such, it is best to avoid probate by making an estate plan.
It is a commonly-held misconception that estate planning is exclusively for the wealthy. This is untrue — estate planning can benefit anyone by helping them to secure the future of their estate and legacy. Most importantly, it helps individuals to determine what they want to happen, what their financial goals are and how they want them to be carried out. This makes it an essential part of end-of-life planning.