Passing down your assets to the next generation has always been a goal for many, but it is rarely a smooth process as it requires extensive planning and time. But why does it matter so much? Surely passing down my condominium requires just a transfer of the deed, right? While that is true to a certain extent, what happens when you have 3 children and 1 property? What you leave behind should unite and not divide the family. It all boils down to good estate management. Every asset be it your business or insurance plan should have plans of its own. So how do you start making these plans?
Asset class to beneficiary mismatch
You have a wife, a daughter and a son. Who gets the house? The business? Or the family heirloom taking pride of place on top of your shelves? People would imagine that with 3 assets and 3 family members, these assets would naturally be distributed evenly. But this common assumption is often the reason why certain families fall prey to bad estate management. The reality is, that the plan in your head will never become a reality unless clear instructions or actions are carried out.
In the case of intestacy in Singapore, your spouse will receive half of your assets while the other half will be split equally amongst your children. (moneysense, 2018) But how can one measure 50% of an asset? A 4-room HDB in Orchard has a higher value in the long term compared to a leasehold bungalow in Joo Chiat. Who gets the property in Orchard or the one in Joo Chiat?
The proper way to approach this is to ask yourself, are private properties suitable for my children’s needs? Or is selling my property to pass down monetary assets better?
We can’t control the present but we can prepare for the future
Imagine being the sole breadwinner of the family. You work tirelessly every day to provide only the best for your family. You've saved a generous amount of money in the bank, purchased private condominiums and you've nurtured your business in preparation for your successor. In the blink of an eye, you meet with a car accident and abruptly leave this world. All should be well, right? You own plenty of assets capable of feeding a few generations. But your two kids are below the legal age to inherit your assets and your spouse is unaware of how to manage your properties properly. All your efforts have gone down the drain as no instructions, in this case, a will was not legalised.
As a movie director, if you have cast the right actors, set the right stage and written the right script, everyone can play their part to make the film a success. The importance of a will is not just about allocating assets to your family but allocating assets that suit their needs best. And if all this is too much for a director to handle, you can always rely on your co-director, in this case, a standby trustee.
Your Standby Trustee
Imagine your estate as a box of chocolate. You have saved this box of chocolate for a long time with the intention of handing it down to your child. But what is likely going to happen when you give a box of chocolate to a young child? A box full of chocolates becomes a box full of wrappers. Just as we should manage our estates properly, we need a standby trustee to ensure that your box of chocolate does not become an empty box.
In the event that you have lost the ability to make the decisions, who do you entrust to be the next in line to decide the planning of your estate? Besides the obvious reasons that a trustee should be equitable in handling the distribution of assets, a trustee’s role is to act as a personal assistant for times when you’re not around.
Unlike a will that can only execute one thing at a time, a standby trust can also execute necessary actions over a period of time. This also means teaching your children the right values and analysing the child’s maturity to handle your assets before fully handing them over. In the event of a divorce, a trustee can also protect your money by halting the monthly payouts.
There is no right time to write a will
Setting up a will is not just about passing down your assets. It’s about ensuring that your family has all the support they need if you aren’t around. Regardless of the age of your child, always give yourself peace of mind that if anything happens, all will be well. Your children will receive the love and care you’ve planned for them. A trustee is assigned to execute your plans, and you can entirely focus on what’s most important. To be with the family knowing that no matter what happens, your family will be safe, well and secure.
“Fun is like insurance. The older you get, the more expensive it gets.”
— Kin Hubbard
References
moneysense. (2018, November 7). Intestacy: What if you don't have an estate plan? MoneySense. Retrieved March 7, 2022, from https://www.moneysense.gov.sg/articles/2018/10/intestacy-what-if-you-dont-have-an-estate-plan