What Singapore's richest must know about personal estate planning

By Tan Choon Leng

The number of millionaires in Singapore is on the rise. Last year, the number increased 10.3 percent to hit 101,000.

The survey by Capgemini and RBC Wealth Management tracked high-net worth individuals with investable assets or disposable income of US$ 1 million or more.

When you look at such data, the number of branded stores and high-end restaurants popping up all over the city-state are hardly surprising!

For the growing number of young millionaires out there, estate planning should be top of mind. Managing personal wealth can be a daunting task for most people, let alone planning for what happens to that wealth after their passing.

Taking time to approach the organization and protection of assets, and anticipating how they will need to be managed is particularly important. Estate planning primarily comprises the creation of a will, appointing an executor, and for high net-worth individuals may include the creation of a trust to transfer particular assets to pre-determined beneficiaries.

Trusts are a particularly viable option and an extremely popular estate planning tool when it comes to providing for vulnerable beneficiaries such as minors. They can also be used to manage tax exposure, protect the estate and provide for future needs.

However, a trust can be difficult and costly to set up and maintain. In addition, managing the information flow, complying with the record-keeping and managing the relationships between the relevant stakeholders can take up a considerable amount of time.

As trusts are a long-term tool, the pros and cons need to be closely evaluated before setting one up.

An unfortunate reality in life is that marital discord almost always creates friction. In Singapore, the timing of when the trust was set up, when the trust assets were acquired and when the funds and the assets were injected into the trust all tend to be taken into account by the courts.

The courts also place high priority in ensuring that the children of the marriage are being sufficiently provided for in the light of the separation of their parents. It is therefore vital to put plans in place to mitigate “damage” and protect matrimonial assets.

Setting up a trust after the breakdown of a marriage may be viewed by the courts as a deliberate act to limit the assets available for division and denying the other spouse of his or her rightful share.

Singapore has taken a number of steps to ensure practical support for arbitration and dispute resolution conducted here. As a result, the country is often considered a preferred arbitration seat both legally and commercially for resolving disputes.

Similarly, Singapore’s trust legislation and infrastructure are considered more robust than in other countries in the region.

There is greater clarity and certainty in the applicable laws making Singapore one of the preferred trust jurisdictions in Asia.

As someone making their first foray into estate planning, there are several factors and options that need to be taken into account.

Hiring an experienced and trustworthy financial planner is one of the first things that someone new to the process should do as well as carefully considering how to own and control different assets.

Estate planning should be high on the agenda for high net-worth families and individuals, who should start planning as early as possible and then review plans frequently, making tweaks as the years go by.

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