Financial Nightmares Your Children Can Have If There’s No Will

|Posted by | Retirement Planning

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When you don’t have a will in Singapore, it can result in vicious infighting and financial nightmares for your loved ones.

Making a will in Singapore is a straightforward process and seldom costs more than S$200 (check among various law firms for the best price). In spite of this, some Singaporeans choose to forego the will. Perhaps they’re procrastinating, or perhaps they have confidence things will “work themselves out”.

That’s a bad idea. 

What Happens When You Don’t Have a Will in Singapore?

When there isn’t a will, your estate will be divided according to the Intestate Succession Act. These are fixed rules that cannot easily be disputed. This is how the distribution works:

In general, your surviving family members are:

  • Just your spouse: your spouse gets everything
  • Your spouse and children: your spouse gets 50 per cent, and the remaining half is evenly divided among your children
  • Only children: your estate is evenly divided among your children
  • Only your parents: your estate is evenly divided among your parents

In the event you have no surviving family members, your estate will go to the Singapore government. For more examples, see section 7 of the linked Act.

While it sounds simple, this can result in vicious infighting and a financial nightmare for your loved ones. Here’s how:

Someone Needs to Be an Administrator, Which Costs Time and Money

When you write a will, you will be asked to appoint an executor. If you didn’t write a will, then an administrator has to be chosen to handle the division of assets. This can be a serious cost in time and money, to the person who has to take up that role.

For example, the administrator will almost certainly need to engage a lawyer, as the legal paperwork is extensive. That means the administrator will need to fork out anywhere between S$1,200 to S$1,700. After that, the administrator will need to work with the lawyer on listing all your assets, the values involved, and the liquidation of those assets (e.g. your car or house may need to be sold to divide the value).

In some unlucky situations, family members may get into a quarrel over who has to bear the burden of being administrator. On the inverse, some families get into fights when everyone decides they should be the administrator.

The problem is aggravated if you have assets with fluctuating values, such as a business or a large stock portfolio. Because the value of these assets change with time, it is important for the administrator to be chosen quickly.

For example, say you have a portfolio of stocks worth S$120,000. Due to arguments over who has to be administrator, six months pass before the stocks are sold. During this time, the stock value plunges 20 per cent amidst a financial crisis. Your family would then get S$24,000 less, because you neglected to write a S$180 will.

Some Family Members Can End Up Abandoned

In an ideal world, families would all care about each other. In reality, we know this sometimes doesn’t happen. We do hear about children neglecting their mother or father, or grandparents being sent to nursing homes against their will.

Now, scroll up and take note of how assets are distributed. Notice that, if you have a surviving spouse or children, your parents will get nothing from your estate. Are you comfortable assuming your spouse or children will look after them?

Also, consider that if you have children, your spouse will only get half the estate. If this would mean your spouse cannot afford to move into a new flat (should that be required), are you confident that your children will pitch in to help?

Trust is great; but a few hundred dollars is a small price to pay, to back it up with a will.

The Distribution Might Be Unfair

Note that laws on inheritance are fixed, and do not change based on what’s “fair”.

For example, the laws state that your assets are evenly divided among your children. However, what happens if one of your children has extensive medical needs, or has spent more of their life caring for you in your old age?

There is no exception that diverts more of your assets to a more caring child. Likewise, if one of your children needs S$1,200 a month for a medical condition, but the other is healthy, they’ll both still get the same amount.

As you know the needs of your family best, it’s preferable for you to dictate the terms of distribution.

The Benefits of Having a Will Outweighs the Costs

There are few reasons not to have a will, considering the benefits versus the cost. Most of the time, the only reason not to have one is procrastination – it does take an hour or so to speak to a lawyer and get things done.

Without wanting to sound morbid, do remember that tragedy is unpredictable. It’s best not to assume we’ll always have years and years in which to get the will done.

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Ryan
By Ryan Ong
Ryan has been writing about finance for the last 10 years. He also has his fingers in a lot of other pies, having written for publications such as Men’s Health, Her World, Esquire, and Yahoo! Finance.