8 Tools You Must Know for Estate Planning in Singapore
Estate planning is the process of planning how you want your estate (i.e. all the assets you have at the point of death) to be managed and transferred after your death. In Singapore, common estate planning tools are: wills, CPF nomination, life insurance, Lasting Power of Attorney and Advance Medical Directive.
In Singapore, estate duties or “inheritance tax” is not payable for persons dying on and after 15 February 2008. You therefore don’t have to worry about planning your estate in such a way as to try and limit the amount of estate duties payable.
This article will give a broad overview of 8 such estate planning tools in Singapore:
- Wills and testamentary trusts
- Central Provident Fund (CPF) nomination
- Manner of holding of immovable property
- Life insurance policies
- Lasting Power of Attorney
- Advance Medical Directive
- Inter vivos trusts
- Distribution of estates owned by Muslims in Singapore
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1. Wills and Testamentary Trusts
Wills contain instructions on how a person’s estate should be distributed after his death. Here are some key considerations in drafting a will:
- Identifying your assets;
- Selecting your beneficiaries (including reserve beneficiaries, in the event of simultaneous death); and
- Selecting your executors and/or trustees;
- Whether a trust should be created.
Some of these considerations are discussed in more detail below.
Identifying your assets
The will need not specify every single one of the assets owned by the person making the will. In most cases, a general clause will distribute all property, movable and immovable and wherever situated. Care must be taken in the distribution of immovable property in other countries as they may not recognise the probate (i.e. the proving of a will’s validity) obtained in Singapore.
Selecting your executors and/or trustees
Executors are persons who must present the will to the court to obtain probate. Trustees are persons appointed to distribute the estate based on the instructions in the will. Executors and trustees are usually the same persons for reasons of convenience, and can also be beneficiaries of the will.
Executors and trustees must be at least 21 years old at the time the will takes effect. This means that it is possible to appoint infant executors and trustees at the time the will is written.
You can also create a trust under your will, for the holding of certain property “on trust” for the beneficiaries of your will upon your death. Such a trust is known as a testamentary trust.
It is common to be unsure of who you want to distribute your estate to, and in what proportion, when writing your will. However, you may amend your will anytime so long as you have the mental capacity to do so.
If you do not write a will, your assets will be distributed according to the rules in the Intestate Succession Act.
Learn the requirements for writing a will in our other article.
2. Central Provident Fund (CPF) Nomination
Central Provident Fund (CPF) monies do not form part of a deceased’s estate and cannot be distributed under a will. This is because monies deposited into CPF accounts are held on trust in favour of the person(s) nominated to receive the funds.
In other words, the person(s) you have nominated to receive your CPF funds will receive all your CPF monies.
There are certain instances when you may want to change your nominee. For example, if your nominee predeceases you, or when your existing nomination is automatically revoked under the law because you have (re)married.
You may change your nomination by making a new nomination online at the CPF Board’s website. Alternatively, you can complete a CPF Nomination Form in person at one of the CPF Service Centres. This form must be signed in the presence of 2 witnesses who are at least 21 years old, and can be the staff at the service centre.
3. Manner of Holding of Immovable Property
Immovable property commonly refers to an interest in real estate, such as your house. There 2 common manners of holding interest in immovable property – tenancies-in-common and joint tenancies.
A tenancy-in-common is where each owner of a property has a “severed” share of the property. For example, A owns 40%, B owns 40% and C owns 20% of the house. A, B and C can choose to sell or deal with their share in any manner they like. Such share or interest in immovable properties held by tenants-in-common can be distributed under a will.
Joint tenancy is when co-owners of a property each own the whole, i.e. 100%, of the property. Under the law, parties registered as co-tenants of a property are presumed to be joint tenants if they do not specify whether they hold the property as joint tenants or tenants-in-common.
If one joint tenant of the immovable property predeceases another, the surviving owner(s) will now own the entire property. This is commonly known as the right of survivorship, and has the effect of causing the deceased’s share or interest in the immovable property to be divested from his estate. In other words, due to the right of survivorship, interest in immovable properties held in joint tenancies do not form part of a deceased’s estate and cannot be distributed under a will.
When undertaking estate planning, you should therefore consider whether you want to hold your immovable property as a joint tenant or a tenant-in-common. For example, married couples may wish to hold their matrimonial home as joint tenants so that ownership of the property will pass to the surviving spouse when the other passes away.
It is also possible to convert the manner of holding of the property from a joint tenancy to a tenancy-in-common, and vice versa, if you change your mind later on.
Read our other article for more information on what happens to an HDB flat when one owner passes away.
4. Life Insurance Policies
Life insurance policies (or irrevocable trust insurance policies) are policies of insurance taken out by a person on his own life for the benefit of his nominee(s) (usually his spouse or children). These policies are termed “irrevocable” as the nomination cannot be revoked, even by the person who bought the policy. The nomination can only be revoked with all nominees’ consent.
As life insurance policies are a form of trust, the benefits disbursed under such policies do not form part of the deceased’s estate.
However, some policies allow policy subscribers to leave the nomination field blank. In such a situation, the benefits of the policy will be distributed according to the deceased’s will.
5. Lasting Power of Attorney
A lasting power of attorney (LPA) is an instrument that allows a person (i.e. the donor) to appoint and authorise another (the donee) to make decisions about the donor’s personal welfare and/or property and affairs in the event the donor loses mental capacity. A donor can select up to 2 donees who can act jointly and/or severally with an additional replacement donee.
With dementia on the rise, the government has been encouraging Singaporeans to file an LPA by waiving the $75 fee payable to the Office of Public Guardian for the execution of the prescribed LPA Form until 31 March 2026. The LPA form must be certified by a lawyer or a medical practitioner.
6. Advance Medical Directives
An Advance Medical Directive (AMD) is a legal document you sign in advance to inform your doctor that you do not want the doctor to use any extraordinary life-sustaining treatment to prolong your life, in the event that you are terminally ill and become unconscious or incapable of exercising rational judgment.
Only individuals who are mentally sound and at least 21 years old can make an AMD. The AMD also has to be signed by 2 witnesses who are not vested in the individual’s death. One of the witnesses has to be the individual’s doctor.
7. Inter Vivos Trusts
An inter vivos – Latin for “between the living” – trust is an instrument created by a person in his lifetime (i.e. the settlor) for the benefit of another (i.e. the beneficiary).
In this situation, the settlor will place his property under the instrument (i.e. the trust). He will then appoint someone (i.e. the trustee) to manage the trust property for the beneficiary. Contrary to popular belief, a trustee need not be a trust company.
The settlor may specify when and how to distribute the property to the beneficiary. The settlor may even specify what conditions the beneficiary must meet before being able to receive the property being held on trust.
A trust is a useful instrument to ensure that your property is used by the beneficiary according to your instructions (e.g. for educational, medical, or religious purposes). A trust can also be set up to leave assets in a will to children younger than 21 until they reach the age of majority and can claim the inheritance for themselves.
The trust can take the form of a simple deed which must be signed, sealed, and delivered to the Inland Revenue Authority of Singapore to be stamped for a nominal fee of $10.
8. Distribution of Estates Owned by Muslims in Singapore
In Singapore, the distribution of estates of Muslims domiciled in Singapore is governed by the Application of Muslim Law Act.
There are several main differences between Islamic and civil estate planning in Singapore, which you may learn more about in our other article.
Estate planning is a daunting task, mainly because of the lack of awareness and the necessary information on estate planning in Singapore. If you need legal advice on any of the estate planning tools discussed in this article, you may get in touch with one of our wills and probate lawyers.
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