There are many things that can give us a good fright like a horror movie or a Halloween trick-or-treat scare – but estate planning should not be one of them! Yet many are still afraid to plan their estate; we present these four main reasons to get over that irrational fear!
First of all, what exactly is estate planning and who needs it? By definition, estate planning is a deliberate planning process of ensuring your loved ones have reasonable financial assets to live on in the event of your death, and for yourself during your golden years or if you should lose your mental capacity.
With an estate plan, you can:
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Protect your family’s financial future
If you start a family or you have dependants who rely on you for financial support, you need to prepare for the unthinkable. Depending on your life stage and religious faith, Singapore laws might put your loved ones at a disadvantaged position financially should you pass away without an estate plan. In Singapore, if you are a Muslim, the Islamic law of estate distribution comes into play. The less than adequate application of the estate distribution law can result in unsatisfactory outcomes that do not reflect the fair and just objective of the faith.
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Protect your assets from liabilities
If you have inheritance, estate planning ensures your inheritance is being conserved and shielded from risk of creditors, failed marriage, and unwise investments.
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Ensure you can continue to contribute to causes you care about
If you have a charity or cause that you care deeply about, by donating a gift in your will you will be helping their work to continue in the future and leave behind a legacy that will continue for future generations to enjoy.
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Ensure the smooth transition and succession of your business
If you are a business owner, estate planning ensures your business can be properly transferred to the right successors, with sufficient liquidity in your estate or company to discharge your business debt liabilities. This is to minimise your business debts from flowing into your personal assets.
Estate planning combines legal and financial tools to achieve the desired outcome. For example, a life insurance contract is usually used to create and secure an immediate estate; an investment fund is placed in a statutory or private trust to protect against creditors; a will is drafted to give legal rights to a designated person to manage and distribute your estate according to your wishes; a Lasting Power of Attorney to designate someone who can manage your financial affairs if you lose your mental capacity. A business buy-sell agreement to ensure your business interest can be monetised.
It is therefore important to seek professional help when creating an estate plan. Our financial advisers are trained with in-depth understanding of various estate planning financial tools, as well as the laws relevant to estate planning. Chase those fears away with an estate plan!
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