We have read many stories about wills being contested. Lawyers say these are mostly due to children or dependants believing that they deserve a larger share than what was stipulated in the will. It could even involve someone you do not intend to give a cent to inheriting some of your wealth.
Globally, the older generation is preparing to transfer trillions of dollars in assets to its young heirs over the next decade. Contested wills are going to become more common, especially in this part of the world where discussions about mortality have long been taboo, and viewed as a harbinger of misfortune and bad luck.
More likely than not, there will be a variation to how you envisioned and intended your money and assets to be distributed after you are gone.
This is where planning comes in. It allows you to leave an inheritance that aligns with your values, helps your loved ones and simplifies the overall wealth transfer process.
Going to court to contest a will can be costly, and in many cases, the cost involved just does not make financial sense to do so.
Mr Christopher Tan, chief executive officer of Providend, a fee-only wealth advisory firm, says his richer and older clients who are business owners worry about who will run the company when they are no longer around, and whether the fair value of the business will be captured.
He says among the things clients think about in legacy and estate planning are: “How do I ensure that my loved ones will not squander away the wealth left behind for them? How do I ensure that I leave them enough wealth to give them a head start in life but not take away the motivation of hard work?”
Some want to ring-fence their assets from their children’s spouses and in-laws.
Just in case you think legacy planning is only for the rich, it is not, although there may be more factors to take into account when it involves a lot of money.
“Whether one is rich or not, you will leave behind a legacy. You either leave behind a positive one or a negative one. From my experience, the wealthier one is, the more considerations one has in legacy planning,” says Mr Tan.
It is a crucial process for anyone who wants to ensure their assets are distributed as they wish and their loved ones, including the young, physically or mentally impaired, are taken care of in a way that is fair.
Legacy and estate planning
Legacy and estate planning have often been used interchangeably, and although there is an overlap in the two, there are subtle differences, Mr Tan says.
Estate planning is about the management of your assets and liabilities after your demise. It ensures your loved ones have enough to maintain their lifestyle, and that your estate is distributed to the rightful beneficiaries using tools such as wills and trusts.
Legacy planning entails you to reflect on what truly matters to you and what you want to be remembered for. What do you hope to achieve with the assets and wealth accumulated over your lifetime? Your goals may include supporting charitable organisations, or leaving a lasting impact on the community.
These will provide the road map for the rest of your legacy planning process, helping you make decisions about asset distribution, charitable giving and other aspects of your legacy plan.
It is something that takes a lifetime to do and not just through the purchase of financial products or creating legal structures, Mr Tan says.
“If all you want is to leave behind an inheritance, estate planning is sufficient. But if you want to leave behind more than material possessions, such as passing down your wisdom and values, and creating something that outlives you, then you need to plan how you can leave behind a legacy when you are alive and through the financial assets you leave behind,” he says.
What happens without a will or a plan?
When you die without a will, your assets fall into the realm of intestacy. Simply put, the court will distribute the assets. This can lead to unintended beneficiaries receiving a portion of the estate, or even the state taking control if no eligible heirs are found.
For instance, if you die intestate with a surviving spouse and children, half of the estate goes to your spouse and the rest is divided equally among the children. This is regardless of the state of your relationships with them at the time of your demise.
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You basically relinquish control over who inherits your assets.
Inadequate estate planning can lead to lengthy and expensive probate proceedings. Probate is the legal process of validating a will, settling debts and distributing assets. Furthermore, probate proceedings are a matter of public record, potentially exposing sensitive family and financial information to scrutiny.
When there is ambiguity or a lack of clear instructions in an estate plan, disputes may arise among beneficiaries. Arguments over asset distribution, personal belongings and even guardianship of young children can strain relationships and tear families apart.
With proper planning, you can minimise estate taxes through techniques such as gifting, trusts and charitable giving.
Who to leave money to?
One of the key elements of a good legacy plan is to have clear definitions of the values, the message, the wisdom that you want to pass to your loved ones, Mr Tan says.
For instance, many of us have causes, charities or non-profit organisations that hold a special place in our hearts. Whether supporting education, healthcare, environmental conservation or any other cause, including charitable-giving in your legacy plan can make a meaningful difference in the world.
Listing the primary beneficiaries of your legacy is a critical step as it directly shapes the impact your assets will have on the lives of others. They can include:
Immediate family: Your parents, spouse, children and grandchildren as well as siblings are often the primary focus of legacy planning. You can provide them financial security, educational opportunities or a comfortable future.
Extended family: These go beyond the nuclear family to include nieces, nephews, cousins or godchildren who can benefit from your legacy.
Close friends: If you have lifelong friends or people who hold a special place in your heart, leave them a financial gift or support.
Charitable organisations: For those passionate about giving back, legacy planning often includes charitable organisations or causes that align with your values and beliefs.
Consider a charity’s reputation, impact and financial transparency. Do your research as many smaller charities do not have the marketing budget to get their names out there.
A senior fund-raiser in the medical field here says legacy giving to medical research and education allows donors to manage their financial situations while they are alive and make a big difference philanthropically for the future.
“It’s a remarkably powerful way of positively affecting the future of medicine and discoveries after we are gone, and helping generations of doctors as well,” she says.
Giving to charity is also a great way to help maximise your tax deductions, which can save you thousands of dollars, experts say.
If you are planning on making a charitable donation in 2025, understanding the tax strategies related to charitable contributions can help you decide how much to give, what assets to give and when to give; so you can provide the maximum amount to charity and receive the maximum tax advantages for yourself.
Whoever you choose, it is essential to consider each beneficiary’s circumstances and needs.
Equal share may not be fair
Legacy planning should not just address the positives but also the negatives such as concerns or potential challenges related to the inheritance. These include tax implications or legal complexities to consider as well as concerns over unequal inheritances, which can occur due to family dynamics, personal relationships and individual circumstances.
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Some of us may feel confident that our loved ones would be able to settle disagreements amicably. But life is not a fairy tale; when money is involved, cracks can emerge and divide even a close-knit family.
Most parents also tend to divide their assets equally among their children to avoid hurt feelings and fighting, but experts say giving each child an identical share might not be the best or even the fairest approach as in the case of a special needs child, or repayment of debt or job done, or simply a love gift for those who were there for you.
Working closely with a wealth expert can help make your legacy plan bulletproof. They can help you create a balanced approach that reflects your intentions, and foster harmony and understanding among your beneficiaries for a smooth wealth transfer.
A good plan must list the assets that you want to leave behind, where these assets are located as well as how and when you intend to transfer them, whether in your lifetime or after your death, Mr Tan says.
Never too late to start
It is never too soon to start thinking about all of this. Experts at Standard Chartered Private Bank point out that taking steps while children are still young creates more opportunities to unite family members in shared goals, and achieve the continuity and vision you are looking for.
The Government encourages everyone to start planning one’s legacy as soon as possible as sudden death and mental incapacity can happen to any of us.
Its one-stop online portal My Legacy integrates key services related to end-of-life matters such as Central Provident Fund (CPF) nomination, lasting power of attorney (LPA), advance care planning (ACP), and will-making into a single platform. Also, its vault enables you to plan, store and share your legal, healthcare and estate matters securely with people you trust.
Start by planning your will and making your LPA, ACP and CPF nomination.
In the event you lose your mental capacity: ACP provides a guide on your healthcare preference when you are not able to speak for yourself.
An LPA gives one or more persons you choose and trust the legal right to make decisions on your behalf when necessary. These decisions cover your personal welfare, property and finances. It is advisable to choose the same trusted persons to speak on your behalf in both your LPA and ACP to avoid potential disagreements on how to care for you.
When you die: A will sets out how you would like your assets to be distributed. This excludes your CPF savings which are not covered by a will.
A CPF nomination ensures your CPF savings are distributed according to your wishes. It allows your loved ones to quickly receive your CPF savings upon your death. Without a CPF nomination, it can take up to six months for the Public Trustee’s Office to identify which of your family members are eligible to claim your savings. You just need two persons to witness your nomination online.
How do you want your heirs to benefit?
While leaving an inheritance to your heirs is a common goal, it is essential to consider how your wealth can best benefit them.
Do you want to provide them with financial security, educational opportunities or a stepping stone to pursue their passions? It’s crucial to have open and transparent discussions with your heirs and beneficiaries about your intentions.
By involving them in the planning process and creating a clear road map for the distribution of assets, you can help ensure that your legacy aligns with their needs and aspirations.
Additionally, working with financial professionals can help you structure your inheritance to benefit your heirs while minimising potential tax and legal complexities.
Ultimately, your legacy plan should reflect your desire to provide for your loved ones in a way that enriches their lives and empowers them for the future. It is your estate. Start taking proactive steps to plan for your legacy.
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