By Janelle Tan (guest contributor)

Recently, we seem to be deluged with news of terrorist attacks or threats, plane crashes and sudden deaths.The one closer to heart for property buffs may be the passing on of CDL’s deputy chairman, Mr KwekLengJoo.

If you are like me, news such as this may have triggered thoughts about what happens when you die. Your family; your possessions; your wealth; your liabilities. What would happen to them? Your bank and investment accounts, properties and businesses will remain, but so do your property loans, car loans, business loans, and final income tax. None of our assets or liabilities disappear with our deaths.

The question is: Would our spouse, children and even parents/siblings be inheriting our assets or liabilities? Would they be inheriting financial blessings or burdens?

Any wealth accumulation strategy is not complete without proper estate planning. Since 2008, Singapore has abolished estate duty. Perhaps because no tax is to be paid on the wealth left behind, few plan for how their estate may be effectively transferred. Yet, tax is not the sole issue.

There are three key things you must know and consider especially if real estate forms a significant part of your inheritance to your loved ones.

1. Liabilities Management

How will your property loan be paid off in the event of your passing away? Where would the legal fees to transfer the title deed to your beneficiaries come from? How would the ABSD and TDSR impact their financial ability and standing to undertake the transfer of home ownership? Would there be a need for forced liquidation of some or all of the properties?

The key here is debt cancellation. Mortgage insurance can easily take away this burden.

2. Ownership Transfer 

The first concern here is with the right of ownership. Are the real estate properties you own in your sole name, in joint tenancy or tenancy in common?

In the case of joint ownership, the surviving owner(s) will receive your share i.e. you cannot gift it away as you please. For tenancy in common and sole ownership, you are free to gift away your portion as you wish.

The second concern is with common disasters i.e. husband and wife, or a family traveling together met with an incident that resulted in the death of all. In such a scenario, if you had willed the property to immediate family members who travelled with you, there would be no living beneficiary to inherit your estate.

Consider organisations or communities that may benefit from the liquidation of your estate and your gifting should your primary beneficiaries not survive you.

3. Protection of Minors/ Vulnerable Beneficiaries

The issue here is with regard to gifting to children under 18, family members with special needs, and/or elderly parents and relatives.

Can you trust your child to handle a large amount of inheritance or manage real estate property affairs at age 18 or 21? Or do you think that perhaps age 25 or 30 would be a more mature age to manage large amounts of wealth?

Do you intend that your elderly parents, or family members with special needs be guaranteed a roof over their heads for as long as they live? How can you ensure that this wish is legally binding on those you entrust them to? Testamentary trusts or a living trust can solve these problems.

The above are typical questions raised and discussed in the course of estate planning. Estate planning in essence is the process of creating our blueprint of how we want our assets and liabilities to be managed and distributed for the assured benefit of our loved ones after we are gone.

Your wishes may be legalised through a written will and where appropriate, a family trust or family foundation. Some asset types require more planning than others when it comes to passing them down effectively. It is thus too simplistic to only consider the percentage distribution of your assets. In the next article, we will look at trust planning in greater detail.

Janelle Tan, co-founder and Managing Partner of Dunn & Partners Pte Ltd, is a licensed estate planning practitioner who provides consultation to families and businesses on wealth protection, preservation and transfer. She also runs financial literacy seminars and workshops on an invite basis. She may be contacted via email at janelletan@dunn-partners.com

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