William Shakespeare bequeathed his second best bed to his wife, Alexander McQueen left £50,000 of his £16M fortune to his pet dogs, while inventor of the iconic Pringles can Frederic Baur requested to be cremated and buried in – no guesses – a Pringles can. Do you know what will actually happen to your assets should you pass on without a will? Let’s find out.
Words by Timothy Ho
A discussion about death is not something anyone enjoys. However, as the saying goes, nothing in this world can be said to be certain, except death and taxes. Not making a will or having a candid discussion beforehand on how your assets should be distributed after your death may actually cause more trouble in future for your family and loved ones.
But before going to a company that does estate planning (i.e., a company that helps you with will writing and its execution), it is important for you to first know that Singapore has her own default Intestate Succession Act.
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[Ed’s note: When a person dies without a will, he/she is said to die “intestate”, in contrast to a person who dies “testate” with a valid will.]
This means that in the absence of a valid will, the rules set on intestate succession will apply, in order to determine how your assets will be distributed amongst your successors. Muslims in Singapore have a separate rule, which is in accordance with Islamic inheritance laws.
For non-Muslims, here are some things you and your spouse or parents need to know about the Intestate Succession Act.
1. Spouse and children split the inheritance
Contrary to what many may think, your spouse does not get everything in the event of your death. Rather, your assets are split equally between your spouse (50%) and your children (50%). If you have more than one child, the half that belongs to the children will be split equally among them.
However, do note that this does not apply to all your assets. One example would be HDB flats, which are commonly under joint owners (i.e., husband and wife). In the event one party passes on, the share of that person will be automatically passed to the surviving joint tenant(s). In other words, your surviving children would have a claim on your other assets but not the HDB flat you own, which would go to your surviving spouse.
On that note, should an absolutely awful event – like a husband passing on while his wife is expecting – happen, the yet-to-be born child is included as a beneficiary.
2. No children, but with parents
This is worth pointing out. If you do not have any children, your assets are automatically split between your spouse (50%) and your parents (50%).
In reality though, the circumstances can be a lot trickier to resolve. For instance, let’s assume a person leaves the following assets upon his/her death:
- HDB flat (joint owner with spouse)
- One private apartment (under his/her name, worth $1 million)
- S$200,000 cash
The HDB flat will automatically be transferred to his/her spouse. However, the apartment and cash will be split equally between the spouse and parents, meaning each party will receive $600,000.
Obviously this split cannot be obtained without first selling the private apartment. Hence, it is not uncommon for assets such as property to undergo a forced sale in the event of death.
3. No spouse, but with children and parents
If there is no surviving spouse, but the children and parents are still around, then the children will automatically inherit everything. This will be split according to how many children there are.
It is interesting to note here the difference between this scenario and the one above (no children, but with parents). While the surviving spouse will not get everything in the absence of children (i.e., they need to split the estate with the parents), the opposite does not apply if there are surviving children and parents but no spouse. The children get everything in this instance.
We want to stress this point because many of us will want to take care of our aging parents in their old age. In the unfortunate event that both you and your spouse pass on suddenly, your parents will get nothing (unless you make specific provisions in your will!).
No spouse or children:
Parents will get everything in the absence of any spouse or children.
Grandchildren can claim parent’s share:
If a parent has passed on, his/her children can claim the parent’s share.
No spouse, children, or parents:
Siblings will get equal portions.
No spouse, children, parents and siblings:
Grandparents will receive equal portions.
No spouse, children, parents, siblings, and grandparents:
Uncles and aunts will receive equal portions.
Absence of any relations:
Government will get everything.
If you do not have a valid will, you’re leaving it to the state to decide how your assets will be distributed. They will follow the above-mentioned laws set in place, but it may not be fair from your point of view or your dependent’s point of view.
Naturally, estate planning is more important for those with more assets. As compared to earlier generations, people who are now in their 50s and 60s are starting to have a lot more assets under their name, so all the more they’ll need to know how to manage these assets properly.
As our country continues to grow and our citizens continue to accumulate more assets, estate planning (together with will writing) will no doubt become an even more important topic for the majority of families in Singapore.
This article first appeared on DollarsAndSense.sg, a website that aims to provide interesting, bite-sized financial articles which are relevant to the average Singaporean.