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Death is a topic that most Singaporeans would rather avoid thinking and talking about.  

Unfortunately, by not doing proper estate planning and discussing such matters, our surviving loved ones might lose out on large sums of money. We highlight 5 ways this can happen, in the hope that it might inspire you to kickstart your estate planning.


# 1 Forced Liquidation Of Assets At Unfavourable Prices

If you do not have a will, your assets will be distributed according to the Intestate Succession Act. For details of how this works, you can read this article about how assets are distributed when someone passes on.

The thing is, it is easy to split money among your surviving family members in accordance with the law. However, if you have assets like a private property, then it will need to be sold before the proceeds can be split.

Unfortunately, this can mean that the property is sold at unfavourable prices, either because the market isn’t ideal for sellers, or the short time frame forces your family to accept whatever offer was received.
 

# 2 Surviving Heirs Unable To Manage Your Investment Portfolio

LQM CF99B9If you have assets like a private property, then it will need to be sold before the proceeds can be split.

Unfortunately, this can mean that the property is sold at very unfavourable prices, either because the market isn’t that ideal for sellers at that point in time, or the short timeframe meant that your family had to accept whatever offer was received.

You might have spent a large part of your life carefully assembling your investment portfolio, spending your weekends devouring the best investment and trading blogs in Singapore.

When you’re no longer around, do you have a plan on how your surviving family members should take over your portfolio?

Should they liquidate all your holdings? Or perhaps you’d like them to sell off those assets that require active management, and hold certain blue chip stocks and REITs for recurring dividends?

If you’re not properly planning and briefing the heirs of your portfolio, they could be making decisions that would make you turn in your grave.

# 3 Your Surviving Family Members Not Knowing About Assets

Part of the will-making process is doing up a proper schedule of all your holdings, including bank accounts, life insurance policies, properties, shares in companies, investment accounts, and even personal IOUs.

Without this schedule, your family might not be aware of assets that can amount to a not insignificant sum of money. Making an inventory of your assets or briefing your executor is crucial to ensure that all your assets are accounted for and taken over in a timely manner after your passing.

As part of the process of making a will in Singapore, one has to do a CPF Nomination, since CPF funds are not covered under the Intestate Succession Act. This ensures that your CPF monies are distributed in accordance to your wishes.

# 4 Overspending On Your Funeral

LQM CF99B9Part of the will-making process is doing up a proper schedule of all your holdings, including bank accounts, life insurance policies, properties, shares in companies, investment accounts, and even personal IOUs.

After your passing, you probably don’t care so much about appearances. What matters most are for your beloved family and friends to mourn, and then honour your memory by living the best lives they can, while keeping memories and values you left them.

This might be your intention, but if it isn’t communicated to your family, then they might (with the best intentions and in all sincerity) feel like they need to give you a grand and spectacular send-off. 

Exquisite coffins, large rented spaces, full-page obituaries, and elaborate ceremonies – there are many ways to upscale a funeral. If that is what you want, that’s great. But if you prefer an intimate, private affair, then letting your intentions be known would save your family from spending unnecessarily.

# 5 Your Family Being On The Hook Needlessly For Credit Facilities

While generally, your family members are not liable for your debts, they would be responsible if they are co-signees on loans and credit cards.

You might have put their names years ago but this has large financial implications, especially if you’re the sole breadwinner.

If you’re still young and in good health, speak to your bank and see if you can ‘clean up’ some of your accounts, so that if the worst were to happen to you, that misfortune does not continue to haunt your surviving loved ones.

Proper Planning Prevents Problems
We spend lots of time trying to optimise our earnings and get the best bang for our buck. Now that we understand how our loved ones could stand to lose from a lack of estate planning and discussion about such matters, there is no better time than now to do something about it.


This article is republished with permission from Dollars and Sense.

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