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5 Ways Your Family Can Lose A Lot Of Money If You Don’t Do Estate Planning

We all strive to live well, but it is also important that we leave well.

Death is a topic that most Singaporeans rather avoid thinking and talking about. Perhaps it is superstition or a refusal to grapple with the inevitable.

Unfortunately, by not doing proper estate planning and discussing such matters, our surviving loved ones might stand to lose out on large sums of money. We highlight 5 ways this can happen, in hope that it might inspire you to kick start your estate planning today.

# 1 Forced Liquidation Of Assets At Unfavourable Prices

If you do not have a will, your assets will be distributed according to the law known as the Intestate Succession Act. For details of how this works, you can read this article about how assets are distributed when someone passes on.

The thing is, it is easy to split money among your surviving family members in accordance with the law. However, if you have assets like a private property, then it will need to be sold before the proceeds can be split.

Unfortunately, this can mean that the property is sold at very unfavourable prices, either because the market isn’t that ideal for sellers at that point in time, or the short timeframe meant that your family had to accept whatever offer was received. Forced liquidation of assets means that your family could be losing out on tens of thousands (or even hundreds of thousands) of dollars.

Read Also: What Happens To People’s Assets When They Pass On?

# 2 Surviving Heirs Unable To Manage Your Investment Portfolio

You might have spent a large part of your life carefully assembling your investment portfolio, spending your weekends devouring the best investment and trading blogs in Singapore.

When you’re no longer around, do you have a plan on how your surviving family members should take over your investment portfolio?

Should they liquidate all your holdings and exit the market? Or perhaps you’d like them to sell off those assets that require active management, and hold certain blue chip stocks and REITs for recurring dividend income?

If you’re not properly planning and briefing the heirs of your investment portfolio, they could be making decisions that would make you turn in your grave.

Read Also: Here’s How You Can Start Building A Dividend Income Portfolio To Replace Your Wage In Singapore

# 3 Your Surviving Family Members Not Knowing About Assets

Part of the will-making process is doing up a proper schedule of all your holdings, including bank accounts, life insurance policies, properties, shares in companies, investment accounts, and even personal IOUs.

Without this schedule of assets, your family might not be aware of assets that can amount to a not insignificant sum of money. Making an inventory of your assets or briefing your executor is crucial to ensure that all your assets are accounted for and taken over in a timely manner after your passing.

Making a will in Singapore should also include doing a CPF Nomination, since CPF funds are not covered under the Intestate Succession Act. This ensures that your CPF monies are also distributed in accordance to your wishes.

Read Also: The SQ368 Plane Fire – Why You Should Do Your Estate Planning, And How I Have Done It

# 4 Overspending On Your Funeral

After your passing, you probably don’t care so much about appearances. What matters most are for your beloved family and friends to mourn, and then honour your memory by living the best lives they can, while keeping memories and values you left them.

This might be your intention, but if it isn’t communicated to your family, then they might (with the best intentions and in all sincerity) feel like they need to give you a grand and spectacular send-off as befitting someone so dear to them.

Exquisite coffins, large rented spaces, full-page obituaries, and elaborate ceremonies – there are many ways to upscale a funeral – and incur a corresponding increase in cost. If that is what you want, that’s great. But if you prefer an intimate, private affair, then letting your intentions be known would save your family from spending unnecessarily.

# 5 Your Family Being On The Hook Needlessly For Credit Facilities

While generally, your family members are not liable for your debts, they would be responsible if they are co-signees on loans and credit cards.

You might have put their names in without thinking much about it years ago, but this has large financial implications, especially if you’re the sole breadwinner.

If you’re still young and in good health, speak to your bank and see if you can ‘clean up’ some of your accounts, so that if the worst were to happen to you, that misfortune does not continue to haunt your surviving loved ones.

Read Also: What Happens To A Person’s Debt When They Pass Away In Singapore

Proper Planning Prevents Problems

We spend lots of time when we’re alive trying to optimise our earnings and get the best bang for our buck. Now that we understand how our loved ones could stand to lose from a lack of estate planning and discussion about such matters, there is no better time than now to do something about it.