Many people think of estate planning as something that only elderly people need to think about. The truth is estate planning is something that every adult should consider.

Apart from property and investments, insurance and other estate planning instruments are powerful tools that wealthy individuals use to protect their families.



With the right solutions, here are six problems that estate planning instruments can solve: 

1. The immediate expenses

When a person passes on, their assets will be frozen until the Grant of Probate is received. In the meantime, without your assets, your family will need a way to take care of themselves. 

Common issues:

• Lack of an ongoing allowance to ensure that your loved ones’ living expenses are taken care of, while awaiting for probate to be settled.
• Last expenses must be paid eg. medical fees, income taxes, mortgage loans, credit card debt and funeral expenses.
• Online accounts on social media, brokerage and bank accounts etc. will need to be closed to prevent identity theft.

Considerations:

1. How confident am I about my loved ones managing a huge sum of money suddenly?
2. If I have minors, children with special needs, adult children who are unable to manage money on their own, who can I trust to manage the funds and look after my children?
3. How long will it take for the probate to be processed before the assets can be distributed?

2. Debts must be repaid

Debts can quickly deplete the funds of any estate, especially if the debts were intended to be repaid over a longer period of time.

Considerations:

1. When the guarantor has passed on, will the family be held liable to pay the remaining liabilities?
2. Does the family have the ability to service the loan?
3. What will happen to those insurance and investment plans that are under premium financing and leveraging facilities from banks? Who continues to service these loans?
   

3. Unequal or unfair wealth distribution

Illiquid assets such as properties of unequal value and locations are often causes of family disharmony.

Considerations:

1. If one child is doing very well, while another is struggling financially, should I leave the property to the child who needs it more?
2. If I own properties of unequal value and location, how do I ensure "fairness" among my children?
3. If I have children living overseas, will there be complications if they inherit my Singapore property?
4. If I have overseas properties, how will the inheritance taxes be taken care of?
   

4. Conflict and uncertainty amongst shareholders of the business that the deceased owned

When the owner of a business passes, it can create succession and other problems.

Considerations:

1. Will my business be able to continue without my leadership?
2. Upon my demise, how do I ensure my remaining shareholders have the ability to buy over the shares from my spouse, if my spouse does not want to be involved in the business?
3. If one of my shareholders has passed on, how comfortable am I with his spouse coming in to run the business together with me?
   

5. Long-drawn or complicated probate process

Insurance with a proper nomination and set up under a trust structure can be used to entirely bypass the probate process.

Considerations:

1. How do I ensure anonymity of a beneficiary from the rest?
2. How do I ensure my beneficiaries have immediate access to some of my funds while waiting for the probate to be settled?
3. If one of my beneficiaries becomes a bankrupt, can I withhold distribution?
   

6. Sustainability when giving to charity

Estate planning tools allows you to control your charitable giving.

Instead of giving a single lump sum, the money can be restructured to ensure perpetual gifting to the charity.

Considerations:

1. What is your "Why" when it comes to charitable gifting?
2. Would you prefer to give out the assets in a lump sum?
3. Is there a way to ensure perpetuity (ie. allowing the charity you support to continue benefitting under your name for generations to come)?
   

All in all, proper estate planning can be very effective in overcoming many preventable issues.

Such tools include trusts, proper CPF nomination, determining the manner in which and how your immovable property are held, life insurance policies, lasting power of attorney and advance medical directive, just to name a few.

Picking the right tool can help to solve the above 6 problems effectively.