Estate, Wills, Probate..…. Understanding the Terminology
When someone dies, their property and assets such as money, investments, and their home come together to form what is known as their “estate”. All these assets must be disposed of according to the terms of their Will, if one exists. This is known as a “probate sale”. Before drafting a Will though, it is important that you know and plan how you want your assets to be distributed upon your death – be sure to identify the assets, the beneficiaries (who you want to distribute the assets to) and the executors (who will administer your estate).
Note: The exception to an estate is CPF monies and assets held in trust, both of which come under separate legal status and do not form part of an estate – and therefore cannot be touched by creditors
The Benefits of Careful Estate Planning
Careful estate planning is vital as it helps the testator protect his/her assets, to ensure that he/she has taken care of loved ones and that their financial needs are protected.
Achieving personal objectives while minimising tax complications for loved ones is usually a key consideration. One example is the Additional Buyer Stamp Duty (“ABSD”) which was jointly introduced by the Ministries of Finance and National Development, and the Monetary Authority of Singapore on 8 December 2011 to cool demand for residential property. [Click here to read our related article].
Senior Partner and Head of JTJB’s Property & Conveyancing Department, Mabel Tan, commented: “Without careful planning of the testator’s interest in residential property, especially if some beneficiaries are given an interest in a residential property, the testator may cause unnecessary inconvenience for those beneficiaries. Should some of the beneficiaries plan to buy a residential property in the near future, they may need to pay ABSD for their purchase as their part share of the testator’s residential property would be counted for ABSD purposes.”
Arranging detailed provisions for family members with special or particular needs should give the testator peace of mind. Careful estate planning can help families avoid conflict, prevent assets from going to the wrong hands or undesirable beneficiaries and provide for effective succession planning.
Singapore’s Favourable Estate Planning Environment
Singapore has a favourable environment for estate planning for a range of reasons, including:
- Well-developed legal system with certainty in its application;
- Favourable tax law for estate planning as there is no estate duty, no inheritance tax, and no capital gains tax to deal with, leaving most of the assets for distribution in accordance with the Will;
- Political stability with strong economic growth and certainty;
- Well-established financial industry with a wide range of experienced professionals including lawyers, financial advisers and trustees;
- Well-connected globally hence, it is easier to manage and administer assets located in different countries.
Remarking on the many benefits, Tan added: “Singapore offers a range of estate planning tools, including wills, trusts, Lasting Powers of Attorney, Advance Medical Directive and CPF Nomination are some examples designed to help individuals plan, manage, and distribute their assets effectively upon their death. The law also provides asset protection, making it difficult for creditors to access assets held in certain trust structures.”
Potential Roadblocks if Estate Planning is Ignored
A number of obstacles can arise if estate planning is overlooked. Family members may not know how to manage your assets, may have to pay your debts or be forced to liquidate some of your assets.
Foreigners in particular should also be aware of the laws relating to residential property. The Residential Property Act provides that foreigners are not allowed to buy landed residential property save for some special exceptions. Tan explains: “One example is the landed property in Sentosa, where foreigners are allowed to buy subject to the approval from the Land Dealing Approval Unit (LDAU). Hence, foreigners must bear that in mind when they carry out an estate planning exercise, a foreign beneficiary who cannot own a landed property in Singapore will be required to sell the residential property or seek approval from LDAU in some cases before they can inherit the residential property.”
Protecting the next generation and ensuring effective distribution are important in estate planning. It’s important to consult with a qualified estate planning lawyer or financial advisor in Singapore to create a customized estate plan that meets your specific needs and complies with local laws and regulations. Estate planning can be complex, and professional guidance can help ensure that your wishes are carried out effectively.
For more information, please contact:
 | Mabel TanSenior Partner JTJB Singapore Office |  | Ting Chi YenPartner JTJB Singapore Office |
|---|
 | Joseph TanConsultant JTJB Singapore Office |  | Tio Siaw MinAssociate JTJB Singapore Office |
|---|