Estate Settlement

Upon death, most of the deceased’s assets would be frozen. These assets would be available for distribution only after the Court issues the Grant of Probate or Letter of Administration. If there was a Will, the distribution would usually be based on the choice of the testator or deceased. If there was no Will, the distribution would be based according to the Intestate Succession Act.

The estate needs of the individual upon a person’s demise can be summarised into six main areas.

1) Provision For Contingencies Before Death

No one knows how and when a person will die. It is important to ensure that sufficient funds are set aside to meet any medical expenses that may arise. In the event that the individual survives for many years, he has to ensure that he has the necessary funds for his retirement. Prolonged illness and mental incapacity may result in an individual not being able to perform or execute his daily transaction, especially in the area of money management. It is important to arrange for a Lasting Power of Attorney (LPA) to ensure that someone that you trust can execute the transaction on your behalf.

2) Provision For Immediate Liquidity

The estate of an individual can only be utilised by the personal representative for payment of legitimate liabilities and distribution to the rightful beneficiaries upon the issuance of the Grant of Probate/Letter of Administration by the Court. The time required for the issue of the Grant of Probate/Letter of Administration may take a few months to a few years. During this period, liquidity is required to meet the expenses of the administration and dependents. So, it is important that Immediate Liquidity is provided during this period.

Immediate expenses normally incurred by a deceased include medical fees, funeral expenses, family allowance, mortgage installments, car installments, estate duty, legal fees and contractual obligations made by the deceased while he is alive.

3) Provision For Dependents And Gifts

It is everybody’s wish that their dependents are provided for after their demise. It is important that the estate is sufficient to meet the dependents' needs and provide for any gifts that the deceased would like to provide.

The common approach is passing on the estate to the spouse and/or children. With the changing environment that we live in, many of us would prefer to look into an alternative form of providing for our dependents. Some of the common approaches include providing loved ones with a regular income instead of a lump sum, providing the use of the estate without transfer of beneficial ownership instead of outright transfer and setting up a trust to ensure that dependents are provided for.

4) Preservation/Enhancement Of Estate

In order to meet the objectives of the individual upon his demise, the value of the estate must be able to meet his estate needs upon death; to provide for estate duty, immediate liquidity and provision for dependents and gifts. Many a time, the current value of the net worth when an individual is alive is sufficient to provide for these needs. However, the value of the estate upon death may be insufficient to provide for these needs.

Therefore, it is important to ensure that the current value of the net worth is preserved and if necessary, enhanced in order to meet the needs of the estate.

5) Guardian For Young Children

A guardian is an important figure in the Will. This is especially so for a single parent and for divorced couples with children. A guardian will step in to take care of your young children if you and/or your spouse pass away prematurely. Your appointed guardian will gain custody of your children and will help to take care of them. He/she will also manage your estate before the eventual transfer to your children when they reach adulthood. In Singapore, the Guardianship of Infants Act 1934 provides the laws for guardianship.

Without a Will, the courts have the power to appoint a guardian; it may not be the person you want to bring up your children. With no Will in place, your representatives will be chosen according to fixed rules. They may not be the people most suitable to act in the interest of your loved ones and estate.

6) Charity: A Legacy Of Giving

The deceased may want to continue doing his part for the society by donating his assets to important charities. A legacy gift opens up an opportunity to make a significant impact on the lives of others.

It can also extend the deceased’s values beyond his lifetime to help the causes he believes in. Truly, it is the greatest gift that keeps on giving!

Let me show you how to plan ahead so you and your loved ones can have peace of mind knowing your wishes and intentions are kept to.

I look forward to hearing from you if you do not know where to start or require professional advice!