WeDigest > Succession > Planning a Legacy for your Estate
« Estate planning » has long been a buzzword in financial planning, which is the process of organising one’s assets and preparing a smooth transfer to loved ones, in the event of incapacitation or death. Nowadays, one may also come across the term “legacy planning” which can encompass even more abstract concepts, such as crafting a family narrative beyond physical assets or establishing philanthropic causes. While the former evokes death as a trigger point, the latter can be put in place as early as possible to create a legacy even when one is alive.
Wealth transition has been well-established for decades in Europe, but this demand is especially acute in Asia where we are seeing a massive wave of wealth transfer in the next two decades as first-generation wealth creators look to hand over the reins to the next. According to 2020 New Fortune Magazine’s 500 Richest List, ~60% of the wealthy are in the 50+ age bracket, which means that they will be undergoing some form of family succession in the next 10-20 years. Their success is often built on entrepreneurship, and thus they may lack the knowledge or familiarity of wealth management services, leading to the risk of inadequate family estate planning.
Insulate assets from claims of creditors, and/or extensions of the family in a legal manner without perjury or tax evasion
In case one loses mental capacity, a person “donee” is designated to make decisions on one’s behalf, in the areas of Personal Welfare as well as Property & Affairs.
A legal document spelling out how assets are to be distributed upon demise. This is usually affordable to draft, can be amended/revoked upon any change in circumstances, and considered the most basic form of planning required for straightforward assets. However even when there’s a will, a grant of probate is still required, though the process may be shortened and less costly.
In Singapore, where there is mandatory social security savings scheme for working citizens and permanent residents, there may be a significant accumulation in the CPF during one’s lifetime. These funds cannot be distributed through a will; therefore, one should submit a CPF nomination to designate the nominees and the proportion for each recipient. Without which, the funds will be distributed by the Public Trustees’ Office according to the relevant intestacy laws
A policy allowing beneficiaries to receive financial compensation in case of unfortunate events for the insured
It is advisable to start legacy planning as early as possible to lay the groundwork, to minimise dissatisfaction, perceived injustice, uneven allocation of responsibilities among family members. If left till the last minute, it exposes the risk of a contest on the estate planning validity based on grounds of execution problems, testamentary capacity, fraud and undue influence. The recent pandemic has prompted many to confront the once-taboo subject of death as one never knows when disaster may strike. The confinement has allowed people to rethink about life’s priorities, and succession planning which may have been left on the backburner. Planning a legacy for your estate.
The process of asset transfer is often far from simple for the wealthy, as there may be multiple parties involved with different agendas and conflicts of interests. As such, it is of paramount importance to work with trusted financial professionals who have had such experience in catering to the stringent needs of these families, to ensure that the right solution be found amidst growing complexity of the financial markets.
No matter how influential and wealthy one is during his lifetime, there is always the eventuality of having to pass on one’s legacy. If one succeeds, life’s goals are fulfilled. If one fails, decades of toil would have been in vain.
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Private Placement Life Insurance, commonly referred to as PPLI, is a bespoke universal wealth planning tool for high-net-worth individuals and their families. As its name suggests, it is a sophisticated unit-linked life insurance contract that is offered on a private placement basis and thus tailored to each client’s unique needs.
The advent of the digital age has given rise to an exciting new asset class, but many have yet to give much thought to the inclusion of digital assets in estate planning. Find out the key considerations and what one can do to ensure his/her digital assets will be transferred to the intended beneficiaries.
Trusts, a commonly used wealth planning structure in Anglo-Saxon jurisdictions, have been used for asset protection, tax planning purposes for centuries. Fast forward to today, using trust structures have been popular as family wealth becomes more complex, with assets being held in multiple jurisdictions.
Trusts and foundations are major features of succession planning. The question often asked is: which should I use?
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