Luke, 30, and Angela, 35, have decided to begin their estate planning journey. Before, they felt there was no need to do so since they did not have children. However, an ST article published on 26 Jun 2022 regarding a tussle over the care of a wealthy Singaporean widow with dementia left them disconcerted.
They learnt that likely due to interest in the widow’s estate, the widow’s friends and her distant relatives were fighting over the legal rights to make decisions on her behalf. Luke and Angela realised that having a Lasting Power of Attorney (LPA) and a clear Will each were fundamental to ensuring their wishes were respected upon mental incapacity and death.
Even as the complexity surrounding estate planning for married couples without children became clear after further online research, Luke and Angela remained undaunted. They continued to be motivated by their desire to spare their loved ones heartache and dispute over their assets. Here are some questions they asked themselves on the journey.
Question 1: What happens if we both lose the mental capacity to make decisions?
The LPA, as Luke and Angela learnt, is a legal document that allows them, as donors, to appoint one or more donees to make decisions on their behalf in the case of mental incapacity. The donees needed to be aged 21 years old and above, just like the donors.
The couple realised that it was crucial that their donees were people they could trust. Their proxy decision maker would be granted decision powers on things that were significant to them.
One area of decision powers involved personal welfare – that is, their daily activities and where they should live after they lose mental capacity. That went right down to whether they preferred to live in a nursing home or a retirement village, and even their music and food preferences. Another area of decision powers involved their property and affairs, including the management of their bank accounts and property.
After deliberation, Luke decided to appoint an older brother and a cousin to be his donees jointly and severely. His older brother would cover property and affairs, and his cousin his personal welfare. Angela made a similar arrangement.
Question 2: Who would inherit their assets if they both die at the same time (e.g. from a car accident)?
Angela realised that as the older spouse, she would be considered by the law to have died first. Without providing for contingencies in her Will, her estate would be combined with Luke’s and would automatically go to Luke’s family. That would be undesirable, as nothing will be distributed to her elderly parents and siblings.
Luke and Angela also came to see that their beneficiaries – the people who inherit or benefit under their Will – would change depending on whether their parents and their siblings survive them, as well as a host of other scenarios.
Recognising the complexities involved, they drew up diagrams of how their estate should be divvied up in different situations. One such diagram is shown below.
Question 3: Who should they appoint to be the executor of their Will?
They chose to engage a professional executor to prevent from adding to the burden of their loved ones upon their death. The executor will also be able to serve as their trustee. He or she will be placed in charge of determining the extent of their assets and liabilities and setting up an estate account. The executor will also take charge of collecting income owing, settling liabilities, and distributing the remainder of the estate to the beneficiaries, as directed in Luke and Angela’s will.
Delving into estate planning made the couple grateful that they saw the value of doing so at a relatively young age. Having their affairs settled now with an LPA and an unambiguous Will meant their loved ones could expect to avoid costly and tedious legal processes and unwanted disputes.
The couple resolved to review their estate plan each year, or when there was significant change in the value of their assets. They wanted to ensure they could continue to have their wishes respected and safeguard their family.
For more insights on various aspects of estate planning, please visit http://estateplanning.com.sg/estate-planning-tools/.
Disclaimer:
This article and the pages it links to are not substitutes for professional advice. For specific advice tailored to your individual situation, please contact the team at Summit Planners.
This article involves a fictional story for purposes of illustration. Any similarity to actual persons, living or dead, or actual events, is purely coincidental.
Sources:
- https://www.businessinsider.com/personal-finance/questions-that-helped-me-write-my-will-with-no-children
- https://money.usnews.com/investing/articles/2017-02-16/estate-planning-is-important-for-people-without-children
- https://www.straitstimes.com/business/invest/friends-relatives-fight-to-care-for-wealthy-spore-widow-with-dementia
- http://estateplanning.com.sg/estate-planning-tools/lasting-power-attorney/
- https://www.msf.gov.sg/policies/Pages/Lasting-Power-of-Attorney.aspx
- https://www.touch.org.sg/about-touch/tips-and-resources/details/2022/04/28/plan-early-and-make-your-wishes-known
- http://estateplanning.com.sg/life-stages/just-got-married/
- https://www.moneysense.gov.sg/articles/2018/10/intestacy-what-if-you-dont-have-an-estate-plan
- http://estateplanning.com.sg/estate-planning-tools/what-is-a-will/
- http://estateplanning.com.sg/estate-settlement/responsibilities-legal-representative-deceaseds-estate/
- https://www.moneysense.gov.sg/articles/2018/10/when-to-review-your-estate-plan
- https://www.cnbc.com/2017/05/31/estate-planning-when-youve-got-no-children-or-heirs.html
- https://www.kiplinger.com/article/retirement/t021-c032-s014-no-children-why-you-still-need-an-estate-plan.html
