Case study Mary survived a car crash which killed her husband. She was hospitalised for several months. Her husband, John did not leave a will. She had to go through all his documents to determine whether he had left a will and then to piece together what were the assets and liabilities of John’s estate. She took two years to get the letters of administration for John’s estate. Under the Interstate Succession Act, she inherited half the estate. The other half went to her two children who were two and five years old. The law required another adult to be appointed as a co-administrator to hold the children's property in trust until they were 21 years old. At first, her brother-in-law was appointed. Later on, he declined to act and Mary had to persuade a sister-in-law to become the co-administrator. If John had left a Will, Mary would have been able to access John’s assets quicker and obtain the much needed money for her medical and household expenses. .

When must I make a Will?

(1) If you are already 21 years old, you should make a Will. If you make a Will, your assets will be managed and distributed in accordance with your wishes in the event that you die. Without a Will, your assets may be distributed to persons to whom you do not intend to give anything.

(2) Another advantage of making a Will is that you can select your good friends or relatives to manage and distribute your assets. Without a Will, you have no control on the choice of people who will look after your assets.

 

Do I need a lawyer to prepare a Will?

You may make your own Will but if your Will is ineffective or invalid, you will not be around anymore to correct it. Your assets may not be distributed in the manner you have desired and your loved ones may suffer as a result. There are certain technicalities that may render a Will invalid.

Example:

The signing of your Will must be witnessed by two persons who are not beneficiaries under the Will and who are not the husband or wife of any of the beneficiaries.

 

How much will it cost to engage a lawyer to prepare my Will?

A simple Will can cost as little as $250.00.

 

Should I tell anyone of my Will?

It is important that your loved ones who will benefit under your Will and the persons you have selected to look after your assets should know that you have made a Will and where it is kept.

 

Can I change or cancel my Will?

A Will can be changed or cancelled by you at any time prior to your death. You should consult a lawyer to ensure that the changes or cancellation are carried out properly. If you or remarry, your Will is cancelled automatically and you should make a new Will. marry

 

What can I include in my Will?

In a Will, you may (when you die) give away your house, car, shares, insurance policies, money in bank accounts, cash and jewellery to family members, friends and to charitable and religious organisations. However, you must to make reasonable provisions in your Will for your wife and dependent children.

 

Estate duty

Estate duty is payable on all real estate situated within Singapore and movable property (cash in hand, money in banks, shares, cars, jewellery etc). Gifts made by the deceased less than five years before death are also dutiable. The rates of estate duty are as follows:

For movable assets, the first $600,000 including contributions to CPF (up to the compulsory rate of contributions) are exempt.

For residential properties, the first $9 million is exempt for an aggregate of properties.

Where estate duty is chargeable, the duty for the first $12 million is at 5% .

Above $12 million, the duty is at 10%.

 

What about my money in the Central Provident Fund?

If you have nominated someone to receive your money in the CPF, it will be distributed to that person regardless of what you may have stated in your Will. Your nomination will be cancelled automatically if you get married and you should make a fresh nomination. This does not include CPF money used to purchase property or shares. These will be distributed under your Will.

 

Do you want to know more about planning for the future?

If so, read on

Insurance - Nominated beneficiaries

It is a common practice when buying an insurance to nominate a beneficiary at the time of taking out a policy. You think the person nominated would receive the proceeds of the policy on your death.

Legally, it is not so straightforward.

In contract, A promise to pay insurance company "B" a premium and B agrees to pay C on A's death. There is a good contract between A and B. But C is not a party to the contract and he cannot sue.

The insurance company and personal representative may take the view that the policy money forms part of the estate of the assured. There appears to be no law that requires the personal representative to pay the policy money to the nominated beneficiary. The ownership of the policy can pass to the personal representative of A and becomes part of the estate of A.

In order to avoid the uncertainties and difficulties relating to the effectiveness of nominations under the policy, one should use a will to direct how payment from insurance should be distributed.

Section 73 of the Conveyancing and Law of Property Act

A policy of assurance affected by a man on his life and expressed to be for the benefit of his wife and/or children shall create a trust in favour of his family and the moneys payable shall not form part of the estate.

The effect of such an insurance policy is:

(a) to create a trust of the life policies in favour of the spouse and/or children;

(b) to give special protection against creditors;  

(c) to provide estate duty savings.

In Re Choong Chak Choon (1937), the husband bought an insurance policy on his life. The beneficiaries were stated as his wife and two of his sons. A clause in the policy allowed the insured to replace the beneficiaries at any time. On his death, he left a will whereby he bequeathed all his real and personal estate to his trustee for certain specified purposes. The court held that the presence of the revocation clause did not prevent the interest in the policy from vesting in the wife and sons.

If you name a wife and children and she dies. Can you insert your new wife and her children? The answer appears to be no.

In the case of Jones v McNeil (1899), the husband took out a policy on his life for the benefit of his wife and children. His wife died and the husband deleted her name and inserted the name of his new wife. On his death, the husband was survived by his new wife and eight children. It was held that the insertion of the new wife was a nullity.

If the policy falls within the statute, the wife and children have an immediate interest in the policy. It cannot be surrendered for cash value etc without their consent.

The money payable under the policy shall not (so long as any object of the trust remains unperformed) form part of the estate of the husband.

What if all the beneficiaries die before the husband?

In the case of Cousins v Sun Life Assurance Society (1933), the Court held that a trust for the beneficiary's estate was created even though the beneficiary had died.

Recently, the Singapore Court ruled that a woman should be given the full amount from her ex-husband's insurance even though they were divorced two years before his death.

Converting an existing policy to a policy falling within the statute

If the assured had not named his wife and children as beneficiaries when he took out a policy on his life, can he subsequently insert his wife and children?

The courts have traditionally been inclined to give a wide and liberal interpretation to allow the wife and children to benefit from a policy. As such, they have interpreted the Act to include endowment policies or policies that only give a contingent interest.

In Kishabai v Jaikishan (1981), the husband took out a policy on his life in 1970 for the benefit of his nephew. In 1974, the husband purportedly cancel his nephew's name and inserted his daughter. The Court held that the policy was valid.

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