As a result of the pandemic, there has been increasing interest surrounding the topic of end-of-life planning. The prevalence of free online will-writing software may have also contributed to the rise in the number of people who have drafted up their wills. While this is a positive sign, many people have failed to realise that drafting a will is not a straightforward process limited to deciding who your beneficiaries are and how much to bequeath to them.
There are common pitfalls that you should take into account to ensure your legacy is preserved as you intended.
A Schedule of Assets is a supporting document alongside the will that provides a detailed list of your assets and debts. This is required by the courts when applying for the Grant of Probate, which will allow your Executors the legal authority to manage and distribute your assets according to the instructions in your Will.
In the absence of the Schedule of Assets, lawyers will have to write-in to institutions such as banks and insurers to verify the assets under the Estate. This incurs unnecessary cost and may delay the legal process significantly.
Furthermore, in the modern world where many assets are held digitally (example, cryptocurrency or online trading platforms), consider whether your Executors and family members have full knowledge and access to your digital assets.
To avoid putting your Executors and family members through an arduous process of “treasure hunt”, always maintain an updated and comprehensive Schedule of Assets.
All debts must be paid out from your Estate before your Executors are able to distribute the remaining assets to your beneficiaries under your Will. This includes existing mortgages, credit card debts and even income taxes up to the date of passing.
Often, people tend to focus on the tabulation of assets and properties when they are deciding on their bequests, without taking into account the debts that must first be paid off. In some cases, the Estate may end up being insolvent if the total liabilities exceed the value of the Estate. Although family members are generally not legally responsible for the deceased’s debts, an Estate lacking sufficient liquidity can bring about disastrous consequences. Family members may not be able to remain living in a property if an Estate has insufficient funding to continue paying off the mortgages.
It is important to consider funding your Estate through various financial solutions, like life insurance, that will provide sufficient liquidity upon your passing.
Another common misconception is that a will is sufficient enough to provide for the distribution of all your assets. However, not all your assets can be distributed in accordance with the instructions inside your will. For example, CPF savings can only be distributed through a nomination. If a nomination has not been made, the monies inside your CPF will be subjected to prevailing intestacy laws.
Joint properties are also sometimes being mistakenly included inside the will. When a property is held under joint tenancy, the interest of the deceased is automatically transferred to the surviving tenant(s). This means that the said property will not constitute a part of your Estate after you pass on.
If you have overseas assets, consider whether the laws in that jurisdiction would recognise your will and if the property can be distributed to your intended beneficiary. Wills drafted in Singapore may not be recognised by the countries that do not follow the Common Law system.
It is advisable to seek professional advice to ensure that your assets are being dealt with in the appropriate manner.
Having a will in place is important but failing to review it regularly may in turn result in further complications for your loved ones. It is recommended to review your will at least once every two years or sooner if there are changes in your life circumstances.
Many people are often not aware that a will drafted before marriage becomes invalid, whereas a divorce does not revoke an existing will. Apart from reviewing the bequests in your will, also consider whether the people named as your Executors or Guardians remain a suitable choice.
The will, along with the accompanying Schedule of Assets, are documents that must evolve alongside your life circumstances in order for it to accurately reflect your intentions.
As can be seen, drafting a will is not merely a matter of deciding who gets what. There are many financial and legal nuances to consider so that our loved ones do not end up riddled with debts and unnecessary stress.
Engaging a qualified Estate Planner who is knowledgeable with the intricacies of estate planning laws and financial solutions can help you tailor your estate plan to your specific goals whilst avoiding common mistakes and pitfalls.
Disclaimer: Estate planning and/or wills-writing services are deemed as prescribed non-financial advisory services. There are no regulatory safeguards for such services as they are not regulated under the Financial Advisers Act.
Article contributed by Ms Venessa Phang, Managing Director, PFPFA Pte. Ltd.
