There are many reasons why people tend to put off making a will, often because they are reluctant to face the morbid subject of their mortality. Another common reason is that some people believe that only the wealthy need to have wills, so they do not bother if they have little savings or only a few assets.
In this article, The Sunday Times highlights why it is necessary to have a will and the key factors that should be considered.
WHY MAKE A WILL
Experts say there is no better time to think about making a will than now, when you are able to. So do not commit the mistake of putting it off until it is too late.
Mr Simon Tan, managing director of Attorneys Inc, suggests that having a will “regulates” your family’s life after your death – what to do, how to do it and where to start looking, with regard to distribution of the estate.
“With a proper will done, you can articulate all your wishes, which can run the gamut from what you wish to give to each of your loved ones, and whether they are to benefit from the gift immediately or over a period of time.
“You can explain the apportionment of your assets to each of them, whether as a measure or endorsement of your love for each of them or a reflection of your intention to cater for their special needs or nurture their nascent talents,” he says.
A proper will can articulate a person’s wishes, such as what he wishes to give each of his loved ones, and whether they are to benefit from the gift immediately or over a period of time, says Mr Simon Tan, managing director of Attorneys Inc.
Ms Ang Kim Lan, director at Goodwins Law Corporation, warns that if there is no will, the Intestate Succession Act kicks in when it comes to distributing the deceased person’s estate.
“If the person is an orphan with no spouse, children, siblings, grandparents, uncles or aunts, his estate will go to the state,” she says.
Furthermore, the fixed rules in the Intestate Succession Act may not work well in some cases.
“For example, if a couple is newly married and, assuming that the husband is older than the wife, and if both die instantaneously during their honeymoon, the law deems the younger one to die last. In such a scenario, all the joint properties of the couple will go to the wife’s parents, which may not be fair to the husband’s parents,” she says.
A will lets you decide on appointing your executors, guardians for your children, whether you want to be buried or cremated, and who gets what and in what proportion, and so on.
You can also make gifts to people outside your immediate family, such as your godson or your favourite charities, adds Ms Ang.
A will is particularly important in cases where you need to set up testamentary trusts for children below 21 years old, special-needs beneficiaries and charities.
It will mean that there will no longer be any ambiguity and uncertainty as to how your estate is to be divided and by whom.
“The last thing you want is for people you do not trust or like to meddle in your financial affairs upon your death or even to benefit, just because the law gives them such an entitlement in the absence of a will,” Mr Tan says.
TOP 7 CONSIDERATIONS
1. Appointing your executor(s) and trustee
Experts recommend that they should be people you trust. Mr Tan says that they would preferably be family members rather than professionals who would have to be paid for their services.
Other factors to consider include appointing those who will potentially outlive you and who have the capability, ability and willingness to handle your affairs, personal matters and/or take care of the financial needs of your children.
Ms Ang says it is prudent to have an executor who will be careful with financial matters.
Mr Amolat Singh of Amolat & Partners says the executors of a will lodged by a business owner can step in straightaway, pending the grant of probate by the court.
“This is especially useful when the deceased has left a business or was a shareholder in a company. Under intestacy (in the absence of a will), all those entitled to apply for the Letters of Administration will have to agree on who should proceed to apply to court and, hence, they cannot step into the shoes of the deceased immediately,” he adds.
Mr Amolat Singh of Amolat & Partners says that without a will, no one may want to step forward or, conversely, many relatives would wrestle for the right, to care for young children.
2. Appointing your children’s guardians
Those with young children can appoint guardians for their children so that there is no dispute between relatives on both sides as to who should care for them.
Mr Singh said: “Not just young children but also for children with special needs. Without a will, no one may want to step forward or, conversely, so many relatives would wrestle for the right to care for the infants.”
These guardian(s) must be people you trust and who share the same values as you. Religion is also an important consideration, says Ms Ang.
3. Making a list of your assets and where they are located
Ms Ang and Mr Tan say this is important as some of your assets may be located overseas or held by another person in trust for you.
“If you do not list them out carefully, they could well be ignored, mismanaged or squandered, or even lose their value if they depreciate over time. It is not necessary to list out the value of such assets as they may increase or reduce over time,” says Mr Tan.
4. Make a list of beneficiaries and your gifts to them
Unlike the distribution of assets under intestacy, which is limited to family members, Mr Singh says you can opt to bequeath a gift to a charitable organisation, illegitimate children and friends.
Gifts may be sums of money or personal effects like jewellery, cars, art items and so on. In fact, you can go beyond convention and choose to set up a scholarship, request annual prayer sessions or require someone to look after a pet dog, and so on.
Lawyers have come across clients who would like to “rule from the grave”. For example, one willed that he would give his property to the children only if certain conditions were met, such as obtaining a degree from Oxford or Cambridge, or marrying a woman/man of the same race/religion.
Another stated that he would give an additional $300,000 to any of his five children if they continued with ancestral worship at their family home in Singapore.
If you have dependants, think carefully if you are leaving anything to them under your will, says Ms Ang.
If you are not leaving anything to them, it is prudent to provide a reason. For example, you may state in the will that you have already made enough provisions in your lifetime for them. This is because they may challenge the will by virtue of the Inheritance (Family Provision) Act – in the absence of an explanation in the will – which will not be desirable for you.
Mr Tan says that when it comes to gifting beneficiaries, it is not a case of one size fits all.
There may be a spouse, parent or child who is physically challenged, staying in a hospice or a home for the aged, or is mentally incapable of looking after himself or herself.
“You may wish to determine how much are his or her monthly needs and factor these expenses to be disbursed by the trustee every month from monies held in trust for this beneficiary with special needs.
“If there are minors who can inherit only when they reach the age of 21, or even later, if you so wish, their share of the estate will be held in trust for them by a trustee.”
It is important to curtail the right of a trustee to invest the funds held in trust for these beneficiaries as you may not want them squandered through poor investment strategies. The children’s education and special needs should be clearly spelt out and discretion given to the trustee to disburse funds.
5. Including a residuary clause
Providing for the people you care about
Ms Ang says it is important to include a “residuary clause” in the will. This means that after the gifts of money or personal items, a “residuary clause” is included to give the balance to certain beneficiaries.
For example, if you leave a named condominium to your son in your will but you later sell it and leave the sale proceeds in your bank account, the cash will not go to him in the absence of a residuary clause.
If there is no residuary clause, any asset not dealt with in your will will be distributed according to the Intestate Succession Act.
“I always strongly advise clients to put in a residuary clause, says Ms Ang.
Another reason is that you may acquire new assets subsequently along the way, which are not mentioned in the will.
“The residuary clause will take care of such new assets so that you need not keep changing your will every time you buy a new property or asset, she adds.
Of costs and time
The estimated time needed to obtain the grant of representation from the court will be longer in the absence of a will. Assuming it is a straightforward estate matter, the estimated time to obtain the Grant of Probate (where there is a will) is two to three months, compared with the four to five months to obtain the Letters of Administration, where there is no will, says Ms Ang Kim Lan of Goodwins Law Corporation. The time taken to distribute the estate depends on its size, efficiency of the executors/administrators and whether there are child beneficiaries.
- If there is no will
The family needs to choose the administrators and the court must approve them. If minors are involved, the family must choose at least two administrators. If there are minors or if the estate is huge, sureties (guarantors) must be appointed in case the administrators do not distribute as required by law.
Legal costs start from about $3,500, in addition to disbursements, including court and commissioning fees, ranging from $800 to $1,500, says Ms Ang.
- If there is a will
Legal costs start from $3,000, unless the matter is complex. There are dis- bursements as well, ranging from $800 to $1,200.
6. Making the will personal to you
Mr Tan suggests expressing your love for the ones you are leaving behind by telling them of your wish and aspirations for them.
“Tell them how much you love them. Include an audio message or a video, pen a poem and leave behind some jewellery and heirloom for them to remember you by.”
Last but not least, it is important to state and identify confidential data, images and/or correspondence, including storage devices that you want destroyed.
7. Reviewing your will
Experts point out that marriages automatically revoke your will, unless it is stated that it was made in the knowledge of an impending marriage. However, a divorce or separation does not revoke it.
Circumstances where a review is necessary are when a person mentioned in the will changes his/ her name, when the executor/ guardian/trustee has to change and when the beneficiary or asset list changes.
Mr Singh points out: “The prudent rule is that you should review your will periodically and keep it updated to see if there is a need to rewrite it.”
Estate planning isn’t just about making a will. Read more about drawing up a Lasting Power of Attorney (LPA) here, and about Nomination Of Beneficiary for your insurance plans here.
This article was first published on The Straits Times on 9 October 2016. © Singapore Press Holdings Limited. Permission required for reproduction.