4 Myths about Estate Planning You Should Stop Believing Today
Living with the vicissitudes of the COVID-19 pandemic over the past two years has made many of us acutely aware of our mortality. In a world where social, economic and public health conditions change at dizzying speeds, setting your financial affairs in order is more important than ever. More and more people are paying close attention to money management and estate planning in the attempt to prepare for the worst—or, at the very least, to improve fiscal balance in their households.
Estate planning is a proven effective way to ensure your loved ones’ financial security in the event that you fall gravely ill or pass away. Many Singaporeans, however, have historically tended to put off estate planning until late in life for a variety of reasons, most of which are rooted in myths and misconceptions about what it is and what it entails. This feature aims to explore and debunk some of the most common estate planning myths that people in Singapore tend to believe.
The Government Will Tax Your Estate’s Assets
Heavy estate taxes are one major reason that people are reluctant to explore estate planning both in Singapore and overseas, as estate planners and attorneys tend to focus disproportionately on these taxes during discussions of the process. While many foreign jurisdictions do levy taxes on deceased people’s assets prior to redistribution, however, Singaporeans should be aware that estate taxes in the country were abolished in 2008.
Prior to its abolishment, the amount of estate tax Singapore citizens paid generally amounted to around $75 million a year on average, comprising about 1% of the country’s total tax revenue. This relatively small amount of generated revenue was the primary reason the government elected to discontinue estate taxes and chose instead to focus on property taxes, which they believed taxed the wealthy more efficiently.
Unwilled Assets Are Taken by the Government
Many people operate under the impression that the government takes the assets of those who die “intestate,” or without valid wills. This is untrue in Singapore, where the Intestate Succession Act determines how to distribute the assets of the deceased among their next of kin.
Under the intestate act, for example, if a deceased person is survived only by their spouse and has no living children or parents, the spouse inherits the entire estate. If they’re survived by their spouse and children, then the spouse receives half, and the other half is divided equally among the children. The act goes on to elaborate in detail how the estate is to be divided in other situations, such as between the deceased’s parents if they have no spouse or children, between their surviving siblings, and so on.
The deceased’s surviving family members always inherit their assets in the proportions that the Intestate Act describes. In the rare case that the deceased leaves behind no surviving family members, this is the only time their assets pass to the government.
Estate Planning Is Exclusively for the Wealthy or Elderly
Another common misconception about estate planning Singapore citizens tend to hold is that it’s only useful to older people nearing the end of life or to individuals with high net worth. The truth is that estate planning is a crucial financial management activity that can benefit anyone regardless of their age, income and marital status. It’s especially crucial for people with spouses and children or other legally declared dependents.
Above all else, a well-crafted estate plan protects your family’s future financial interests by guaranteeing that they receive whatever assets you wish to give them in the proportions that you dictate. As long as you maintain a bank account, have loved ones that depend on you to provide for them and own property and other assets, an estate plan will definitely be useful to you.
Estate Planning Requires a Lawyer
The high cost of hiring a lawyer to draft essential legal documents like wills and powers of attorney can deter many people from exploring estate planning. While professional legal advice definitely helps and may even be necessary at certain points in the estate planning process, there are many documents you can draft on your own if your family and financial situation are fairly simple.
Many hospitals, for instance, supply directives that can help you draft healthcare decisions. Certain organisations that offer legal aid may host will forms for download on their websites at little to no cost. You can also ask your employer if they offer estate planning documents or discounted legal services as an employee benefit.
In lieu of a lawyer, you might also consider reaching out to an estate planning agency, whose fees are usually significantly more affordable. A professional estate planner can sit down with you, assess your financial situation and help you devise a holistic, efficient strategy in just a few sessions.
While wealth management may be intimidating to many, estate planning is not an especially long, difficult, or exclusive process. All you need is a seasoned professional who can guide you through the process and show you the best ways to safeguard your assets.
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