Do I need a Will?
For most people with dependants they definitely need to have a Will. However, for those without dependants then the answer is 'probably'. It is estimated that only 10% of people have made Wills. To die without a Will is to die Intestate (not having one). Without a Will, properly signed and witnessed, the Rules of Intestacy might be imposed by the Government of the country where you live. These rules vary from place to place, and indeed from state to state in countries like Singapore, Australia, the USA and Canada.
Wills are an important Estate Planning tool when people are looking into their financial affairs. Most people have an idea of their personal wishes but have not done anything about it. Excuses used to avoid creating a Will are:
"Everybody already knows who's supposed to get what." OR
"I have a list of my assets, and the persons to whom they should be given." OR
"I don't have much. Therefore I will let the children or my surviving spouse decide who gets what." OR
"Last year I put all my money in a joint account with my eldest son. After I die, he knows to split it"
By not having prepared a legal Will most people are courting disasters for their intended beneficiaries. The reason is that there is simply no way for anyone to enforce your intended wishes if it is not contained in a Will. Recent and past high profile cases in Singapore and Hong Kong have demonstrated the arguments amongst siblings when they are jockeying for position over the distribution of even small amounts of assets.
Many people understand the problems associated with not having a Will. They also believe that their children would respect the parents' wishes and would not demean themselves to fight over the estate. While most people could be right in their assumptions, have they considered the children's spouses? Whether it is intended or not in-laws (sons and daughters) can be a problem as they may believe that they are protecting the interest of their own family. All it takes is some pressure bought to bare or well intended comments by an in-law to create doubt.
While most people do not have clear ideas on who their personal representative will be and they just assume the surviving spouse? However, what happens if both your spouse and you pass away at the same time. Somebody has to assume responsibility and the necessary authority to preserve, gather and distribute your assets in accordance with your wishes provided by your Will, or by state law, if you die intestate (without a Will).
In most countries if you die intestate, the court will choose the person responsible for wrapping up your affairs. However in Singapore the state could be distributing your estate in accordance to your religious beliefs. For example if the deceased was a non-Muslim, the assets will be distributed in accordance with the 'Instate Succession Act'(Cap. 146). While if the deceased was a Muslim, then the assets will be distributed in accordance to Section 112 of the Administration of Muslim Law Act (Cap. 3) which provides that the estate of the deceased shall be distributed according to the school of the Muslim law observed by the deceased.
There is little consistency internationally and for you much depends on where you think of as home (also known as your 'domicile of choice'), for it may be the rules of that country which will dictate how your assets are distributed. What is more important the Government of your home country may also be entitled to tax your estate! People must also understand that if they have assets in other countries the laws governing Singaporean (or their home country) assets may not necessarily apply. For example if you die intestate (without a Will) in the US and are married with children, the law of most states awards 1/3 - 1/2 of the descendant's property to the surviving spouse, and the remainder to the children, regardless of age
While if you do have a Will in place did you consider the welfare of your children if they are minors, and have you appointed a guardian(s) in the Will. Of course if there is a surviving parent, he/she automatically is guardian. Also, have you considered the scenario of what happens to your children if both parents are involved in an accident from which there is no survivor? Who will bring up these children in your place, what happens to them if the appointment is not made and how will that be funded?
In many countries the law states that any child under the age of eighteen must have an adult who is responsible for them. In the event of both parents being dead and there is no evidence of Guardians being appointed then the State where the children live takes over that responsibility until a Guardian is found. If no suitable person is available or willing to do it then the State remains in charge of the orphaned child or children for the rest of their minority.
In such a situation children are made Wards of Court. The Court will then supervise arrangements for their immediate care, which (at the very worst) could mean a State run Institution, a Charitable Home or foster parents, and what should happen to them in the long term. These problems are compounded if you are living away from your home country, usually no relatives nearby and the possibility of Government intervention is much more apparent.
In many countries guardianship ends at the age of legal adulthood (usually 18, sometimes 21). This means that any property left to a child is exclusively owned and controlled by him/her. Most people realise that it is not a good idea to die intestate, unintentionally leaving assets to small children. However sometimes people forget that both parents may die prematurely.
Tax can be another big issue. Sensible financial planning can reduce your tax bill quite legally. Inheritance Tax (or its equivalent), Estate Duty and Capital Gains Tax on the transfer of assets following a death can be minimised legally when properly organised.
Finally, if significant assets are involved then alternatives to a Will can be considered. A Trust structure can be ultilised. One benefit of a Trust is to keep your estate from eventually falling into the hands of teenagers or other non-desirable people. The setting up of a Trust is a complicated issue and experts must be consulted.
SINGAPORE RULES ON DISTRIBUTION OF A DECEASED'S ESTATE UNDER THE INTESTATE SUCCESSION ACT (CAP. 146)
Section 7 provides for the following rules of distribution :
* Spouse means husband or wife.
* Issue means a child (legitimate or legally adopted) and the descendants of a deceased's child.
