Leaving a legacy is about planning how your estate assets are to be distributed upon your passing. As life can be full of uncertainty, such an important matter is best handled earlier in life rather than later.
In this article, we will highlight the importance of planning your legacy, the methods of legacy planning, and the consequences of not having a legacy.
Legacy Planning
Legacy planning is important as it allows you to provide directions as to whom and how your estate is to be distributed. This will help ensure that upon your passing, your remaining family members are provided for to the best of your means.
Beyond ensuring that your loved ones are provided for financially, legacy planning can also allow you to leave behind specific assets, such as jewellery or watches to particular individuals. While this may seem inconsequential to some, the effect of bequeathing such items can hold significant weight due to the sentimental value they carry.
Should there be specific causes that you wish to champion, planning your legacy can also help you direct your estate towards them. For instance, you can plan for a certain portion of your assets to go towards a charity of your choice upon your passing.
How to Plan Your Legacy
The steps to legacy planning have been listed as follows:
- Collating all your assets
In order to make informed decisions on the distribution of your assets in the event of your passing, it is necessary to determine all the assets that you have in total. - Deciding how your assets will be distributed
With a clear bird’s eye view of the assets that will form part of your estate, you can make a proper decision regarding how and to whom you wish to distribute your assets. - Effecting your decision
Having established how your estate is to be distributed, you would then take the necessary actions to ensure that your plan will be carried out as indicated. Typically, this would entail drafting a Will in accordance with your wishes.
It is important to note that CPF monies and insurance pay-outs cannot be governed by a Will. For such assets, you are advised to make the relevant nominations with the CPF Board and your insurance companies instead.
Although legacy planning typically refers to your estate management in the event of your passing, you may also take steps to safeguard your interests in case of mental capacity loss. This can be achieved by having a Lasting Power of Attorney executed.
You may also wish to take pre-emptive actions to ensure that your child’s education and medical expenses are provided for, in advance of untoward situations. In such cases, it would be prudent to set up an education or medical trust accordingly.
The Default Intestacy Position
If an individual does not make a Will to set out how their legacy is to be distributed, the Intestate Succession Act 1967 (“ISA”) will provide how such distribution is to take place upon their passing.
