What is Estate Planning?
Estate planning refers to the process of determining what happens to one’s assets, including the management of your property and financial affairs, in the event that you lose mental capacity or pass on.
This article will introduce two important tools in estate planning:
A will is a legal document which states your last wishes relating to your assets and loved ones after you pass on.
Generally, a will includes a list of the following:
- All your assets and liabilities, such as your debts.
- Beneficiaries – who will receive the assets and how much each beneficiary will receive.
- Guardians – to care for your children until they turn 21 years old.
- Executors – to carry out the instructions of your will.
What if I do not make a will?
If you do not make a will, your assets will be distributed according to the Intestate Succession Act (ISA) and such distribution may not be in line with your wishes.
For instance, if you have children, your spouse and your children will each be entitled to one-half of your estate under the ISA if you did not write a will. However, you may wish to have more than half of your estate given to your spouse, who may be financially strapped, instead. To do so, you would need to write a will.
What is a Lasting Power of Attorney (LPA)?
An LPA is a document which allows you (the donor) to appoint one or more persons (known as the donee) to manage your affairs and make decisions on your behalf in the event that you lose mental capacity.
You can give your donee general powers relating to personal welfare (such as where you are to live), and to property and financial affairs (such as the carrying on of your business). Alternatively, you can give your donee only certain specific powers.
The donee can be a family member or close friend, or a professional donee such as a lawyer, accountant or social worker who has been certified to act as a professional donee.
What if I do not make an LPA?
In the unfortunate event that you lose mental capacity, no one will be given the right to make decisions on your behalf until your family members applies to court for the appointment of a deputy to manage your affairs.
Court processes may be lengthy and expensive, and the court may not appoint a deputy of your choice – someone who understands you and will act in your best interests.
You can read more about why you should make an LPA while you still can in our other article.
Why You Should Make Both a Will and an LPA
For a more complete estate plan, you should have both a will and an LPA. This is because, a will only takes effect after the individual death, whereas an LPA takes effect after the individual loses his mental capacity.
If you have a will but do not make an LPA, you will have no say on how your affairs should be managed once you lose mental capacity. This is because, the will only operates after you pass on and does not cover the situation where you lose mental capacity.
Likewise, if you make an LPA but not a will, you cannot leave custom instructions for how your assets should be distributed after you pass on because the LPA only operates when you lose mental capacity.
By writing your will, you can ensure that you leave your loved ones well taken care of, and by writing an LPA, you can safeguard your best interests when you have lost the mental capacity to do so yourself.
How Much Does it Cost to Make a Will and an LPA?
Cost of a will
You can make a will online yourself for $89 per will. This is a flat fee which includes unlimited edits and downloads of the will document for 1 month.
However, while you do not need a lawyer to write a will, it is best to engage a wills lawyer to ensure that your will is valid, and your assets are distributed in accordance with your wishes. It costs between $200 to $400 to engage a wills lawyer to draft a simple will for you.
Cost of an LPA
For an LPA, it costs around $200 to have a lawyer witness and certify your LPA. In addition, there are different registration fees depending on your citizenship status, and whether you use Form 1 (to give your donee general powers) or Form 2 (to give your donee specific powers).
|Form 1||Form 2|
|Singapore Permanent Residents||$100||$250|
*The $75 registration fee for Form 1 will be waived if you apply before 31 August 2020.
The lawyer you engage to act as the certificate issuer of an LPA for you may also be able to help draft your will and act as a witness when you execute the will.
While you may not be comfortable thinking about death and mental incapacity, you are advised to consider estate planning, and make both a will and an LPA while you can.
Please feel free to contact me should you require a lawyer to make a will and/or an LPA.