Creating a Financial Will is a crucial step in ensuring that your assets are distributed according to your wishes after your passing. However, many people make avoidable mistakes during this process, which can lead to legal complications and unintended outcomes. In this blog post, we will explore some of the most common mistakes to avoid when making a Financial Will. By understanding and steering clear of these pitfalls, you can create a comprehensive and effective Will that provides peace of mind for you and your loved ones.
Mistake 1: Delaying the Writing of Your Financial Will
Delaying the creation of your Financial Will can significantly impact how your assets are distributed following your passing. In the absence of a Will, the estate of the deceased falls into intestacy. Intestacy necessitates that the deceased's estate be distributed according to the laws outlined in the Intestate Succession Act.
Family members of the deceased must apply for 'Letters of Administration' to be appointed as administrators of the estate before they can proceed with distribution under these laws.
The process of applying for Letters of Administration can be intricate. It involves:
Compiling a detailed Schedule of Assets listing all estate, money, and property of the deceased.
Submission of all requisite documentation to obtain court approval.
In cases where the estate's value does not exceed $50,000, family members may opt to engage the Public Trustee's Office (PTO) for administration, subject to a fee. The PTO will oversee the distribution of the estate under the Intestate Succession Act.
In instances where the deceased adhered to the Muslim faith, the PTO will adhere to specific Muslim inheritance laws when distributing the estate.
Mistake 2: Bequeathing Only Physical Assets
Overlooking digital assets such as social media profiles and email accounts during the estate planning process is a critical oversight. These assets can hold significant sentimental and financial value, yet they are often neglected in Traditional Will preparations. Here are key considerations:
Valuable Digital Content: Items such as digital photos, videos, and documents stored online may possess considerable sentimental value to family members.
Financial Implications: Some digital assets, like cryptocurrency or online business accounts, may have direct financial implications that need to be distributed properly.
Security and Privacy Concerns: Failure to plan for the transfer or closure of online accounts can lead to security breaches or unauthorised access, potentially compromising sensitive information.
Legal Complexities: Laws governing digital assets vary widely across jurisdictions, making it essential to seek legal advice to ensure compliance and smooth execution of digital asset bequests.
To effectively manage your digital legacy, consider updating your estate plan to include specific provisions for your online presence. This ensures that your loved ones can access your digital assets according to your wishes, safeguarding both personal memories and financial interests.
Mistake 3: Distributing CPF Money
Central Provident Fund (CPF) savings cannot be distributed through a Will due to specific nomination rules. It's essential to understand the correct procedure to ensure your CPF savings are distributed according to your wishes and legal requirements:
Comprehensive Coverage:
A CPF nomination acts like a special instruction for your CPF savings after you're gone. It ensures your loved ones or chosen beneficiaries receive this money, excluding any properties or investments you bought using CPF funds. This nomination protects your savings from creditors and guarantees a smooth distribution according to your wishes, bypassing any potential delays or complications.
CPF Nomination Process:
To ensure your CPF savings go to your chosen beneficiaries, you need to tell the CPF Board directly through nomination. You can do this online, CPF Service Centres, or ServiceSG Centres.
Intestacy Implications:
Without a CPF nomination, distribution defaults to the Public Trustee's Office under intestacy laws, determining distribution based on familial circumstances like the presence of children or surviving spouses.
Understanding the proper steps for your CPF nomination is crucial for ensuring that your savings are distributed as intended, providing financial security for your beneficiaries.
Mistake 4: Not Writing a New Will After Marriage or Divorce
Impact of Marriage on Existing Wills
A critical yet often overlooked detail is the potential invalidation of a Will upon marriage. Generally, unless the Financial Will specifically contemplates the impending marriage, it becomes automatically revoked upon entering wedlock. To ensure your assets are distributed according to your current wishes, drafting a new Financial Will after marriage is highly recommended.
Divorce and the Persistence of Wills
Conversely, divorce does not automatically invalidate your existing Will. If you previously designated your ex-spouse as a beneficiary, that provision may remain in effect unless a new Will is created. This could lead to unintended consequences.
Furthermore, it's important to recognise that a legally separated couple remains married until the divorce is finalised. Therefore, under intestate succession laws (applicable when no valid Will exists), an estranged spouse may inherit a significant portion of the deceased's estate.
Mistake 5: Not Having a Residuary Clause
A well-crafted Will should encompass the distribution of all your assets. However, it's not uncommon to unintentionally overlook certain possessions or financial holdings. This is where a residuary clause proves invaluable.
Function of a Residuary Clause:
A residuary clause acts as a "catch-all" provision within your Will. It specifies how to distribute any remaining assets not already designated to specific beneficiaries. This ensures comprehensive distribution of your estate, preventing unintended consequences.
Consequences of Omitting a Residuary Clause:
In the absence of a residuary clause, assets not explicitly included in your Financial Will would be subject to intestacy laws. These laws dictate the distribution of your estate based on predetermined familial relationships, potentially leading to outcomes that deviate from your wishes.
Avoid Loopholes in Your Financial Will With the Help of The Life Legacy
Ensuring that your Financial Will is airtight is crucial to safeguarding your legacy and providing peace of mind for you and your loved ones. At The Life Legacy, we pride ourselves on offering comprehensive services to help you navigate the complexities of will creation and attestation. Our team of experts is dedicated to eliminating any potential loopholes, so you can be confident that your final wishes will be honoured exactly as you intend.
Don't leave your legacy to chance. Schedule a consultation with one of our legacy planning specialists today and take the first step toward securing your financial future. Contact us now to get started.
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