As we work hard to fulfil our life financial goals such as retirement, we should not ignore the importance of estate planning as part of this journey. Without this, all your financial goals may be destroyed in a matter of minute. Here are some important pointers that a person should take note.
 
 
Planning for mental incapacity
 
Plan for mental incapacity for oneself should be the first priority. Mental incapacity planning involves setting up arrangements or structures such as trusts to prepare for any unfortunate event of mental incapacitation. When dementia or Alzheimer’s strikes, your appointed person will step in and manage all your personal affairs, including the financial aspect of it. A simple act of drawing up a Lasting Power of Attorney (LPA) while one is still healthy will go a long way to ensure everything will fall in place according to your wishes.
 
If you have a trust that is triggered only in the event of your incapacity, your appointed trustee can access your financial resources to allow the family to take care of you in the event you need long-term medical attention.. Without a trust in place, your family would have to turn to the courts to appoint a professional to oversee your assets. This is a lengthy process and could cost you a bomb.
 
 
Providing for dependents when you are no longer around
 
Another important area of estate planning is leaving enough for your loved ones when you pass on. To do so, estimate the amount each dependent would need, either in their lifetime or when they turn adulthood.  Ensure that your estate, which is made up of the assets you leave behind less off the liabilities that you need to pay off, is sufficient to provide for them. Consider non-day-to-day expenses such as educational expenses for your young dependent. With the rising cost of housing, it may be useful to give it some thoughts on whether your young dependents are able to own a flat when they grow up. Remember to cater for caregiving expenses and ageing-related expenditure for your older dependents, such as home-nursing or nursing-home costs, and also potentially large medical bills.
 
Insurance solutions are one of the most cost-effective ways to create an instant estate amount that your dependents would need to carry on with their lives with as little disruption. Life insurance creates an immediate estate when one passes on. With careful planning this insurance coverage can result in a deceased’s estate valuing a few times more than his net worth while he is alive, thus providing the necessary assets for their loved ones to continue living with dignity.
 
 
Write a Will and/or set up a Testamentary Trust
 
If you have not written a Will, it may be wise to do it now. When a person dies without a valid Will in Singapore, the person is said to have died “intestate.” In such an event, the Intestate Succession Act sets out how the estate is distributed. Your loved ones will then have to go to Court to apply for a Letter of Administration and the court will also need to select an administrator to handle your estate. This process delays estate distribution and involves legal fees that easily amount to a few thousand dollars.
 
When writing a Will, do include at least a substitute executor and guardian (for families with juveniles) and a substitute group of beneficiaries for a more proper and detailed distribution.
 
If you have young or elderly dependents, staggered the pay-out rather than lump sum distributions of inheritance to protect them. This is when the use of testamentary trust can come in to safeguard your young vulnerable dependent from mishandling the monies through reckless spending, and/or the elderly from fraud and scams. Staggered distributions can help these vulnerable group to avoid spending the whole sum immediately and as a result develop irresponsible money habits during their less-mature life phase.
 
 
In conclusion
 
Discuss the suitability of these in your estate plan with a qualified financial advisor who has practical and professional experience..
With these strategies in place, you will be in a better position to ensure your financial life goals are met without any WHAT IF?
 

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