What is Legacy Planning, and When Should You Start?

Alevin Chan

Alevin Chan

Last updated 06 April, 2023

Legacy planning is a useful exercise that benefits you and your family in many ways, including asset distribution and preservation of  your healthcare rights. Here’s what you need to know about legacy planning and when to start.

Legacy planning needn’t be restricted to the ultra-wealthy or tycoons with mega business empires.

While it’s true that the more assets you have, the more complicated things can potentially get upon your passing, that doesn’t mean that the average Singaporean won’t need a legacy plan.

Legacy planning is a useful exercise for anyone who wants to leave something behind to their loved ones, and who wants to do so in a deliberate manner.

It is also important to protect you and your family from unwanted complications as you near the end of your life, and to preserve your right to exercise your health and treatment preferences.

Let’s take a closer look at legacy planning and when you should start on yours.

Related to this article: Money Confessions: 6 Singaporeans Share Just How Much Insurance Coverage They Have

Citigold Tactical 50_BLOGARTICLE_800x250

SingSaver Exclusive Offer: Get an Apple iPhone 15 Plus 256GB (worth S$1623.85) or S$1,200 Cash when you successfully apply for a Citigold account and make a S$250,000 deposit within 3 months of account opening and maintain these funds until gift fulfilment. Also, apply through SingSaver and enjoy 3.0% p.a. on a 6-month SGD Time Deposit. Valid till 2 June 2024. T&Cs apply.

Plus, get additional welcome rewards on top of the above offer (T&Cs apply):

  • Get additional S$100 Cash Reward from Citibank when you complete an Investment Risk Profile and Fact Find
  • Get additional S$100 Cash Reward from Citibank when you hold a valid Primary Citibank Credit Card
  • Get additional S$500 Cash Reward from Citibank when you apply for a Citibank Mortgage loan with min. loan size of S$800,000 within 3 months of account opening
  • Get additional S$250 Cash Reward for every S$50K purchase of investment and/or insurance from Citibank


Understanding legacy planning

What is legacy planning?

Legacy planning is a type of financial strategy that aims to distribute your assets to your loved ones upon your demise or potential mental incapacity, according to your wishes and intentions.

It involves the organisation of your personal and financial affairs, and may include medical or healthcare directives. The latter is important to ensure you are able to receive your preferred treatment protocol should you fall ill.

Why is legacy planning important

Basically, legacy planning lays down instructions and directives on how the assets you leave behind should be handled. As such, legacy planning can be important for:

  • Removing uncertainty and confusion among surviving family members and loved ones

  • Quelling potential disputes and quarrels over conflicting claims

  • Speeding up the distribution of your assets

  • Protecting you and your assets from predatory parties

Related to this article: A Guide To Leaving A Legacy In Singapore


Legacy planning in Singapore – what does it entail?

Writing a will

Will writing is perhaps the most common instrument of legacy planning for the average person. Provided it is properly written, a will acts as a legal document that protects your right to your last wishes, and ensures they are carried out to the extent that is legally and physically possible.

In your will, you can detail how your assets are to be distributed, and to whom. You may also appoint legal guardians to take care of underaged children, and name an individual or party (such as a law firm) to oversee and execute your will.

CPF nominations

Note that your CPF savings will not be covered in your will, and any funds left in your CPF account will be distributed according to prevailing rules.

You may, however, dictate who receives your CPF savings by making a CPF nomination – whether online or in person at a CPF service centre.

Up to 15 individuals may be included in your CPF nomination, and your nominees can include non-related persons, and even foreigners.

Note that CPF nomination does not cover the following:

  • Properties bought using CPF monies

  • Payout from Dependants Protection Scheme (a separate term-life policy purchased using your CPF funds)

  • Investments made under the CPF Investment Scheme

You may include specific instructions for the above in your legacy plan to head off potential complications.

Related to this article: CPF Nominations: What Happens To Your CPF Money After You Die?

Lasting power of attorney

Lasting power of attorney (LPA) allows you to appoint an individual or group or individuals to make decisions on your behalf about your personal welfare and affairs.

LPA activates only when your mental capacity to make decisions on your own is diminished or lost, such as during dementia, paralysis, coma, etc.

This can be done online using your SingPass login, or you may call the Office of the Public Guardian (OPG) hotline at 1800-111-2222 to enquire further, or visit any Citizen Connect Centre or ServiceSG centre to apply. 

Setting up a trust

A trust is a legal arrangement that can be used to help a family manage its wealth and protect personal assets.

Setting up a trust involves the appointment of an individual – the trustee – who will hold and manage the assets in the trust, in the best interest of the beneficiaries.

One example is setting up a trust fund for underaged children, whereby the trustee will use the fund to pay for living expenses until the trust’s beneficiaries (i.e., the children) reach adulthood. At that point, the trust may be dissolved and the assets distributed.

Advance care planning

Advance care planning focuses on planning for your future health and personal care, which instructs your doctors and caregivers on your treatment decisions and care preferences should you fall victim to serious illness or injury and become unable to communicate your wishes properly.

As part of advance care planning, you may appoint a trusted individual to discuss your healthcare wishes. This discussion can be recorded and form part of your advance care plan, and taken reference from during an emergency.

Related to this topic: 5 Tips for Caring for a Parent With Dementia


When should you start legacy planning?

There is no hard and fast rule for when you should start legacy planning. However, in general, if you have dependents or loved ones that you want to bequeath your assets to, it’s a good idea to draw up a legacy plan sooner rather than later..

The older you get, the more urgent it becomes for you to lay down a legacy plan, as your risk of debilitating disease and/or accidents rise. It’s best not to wait till the last minute – such as upon being diagnosed with end-stage cancer – as you may not be in the proper frame of mind and may be weaker to manipulation, or miss out crucial details or items.

Legacy planning is best performed with a calm and clear mind. You will also want to give yourself sufficient time to ponder your plan, and perhaps consult a financial advisor or trusted confidant.

Lastly, your legacy plan does not need to be exceedingly detailed or complicated – it just needs to have clear and unambiguous directives for how your assets should be handled. Your instructions will also cover future assets, such as tax returns or investment returns.

Lastly, legacy planning need not be a one-and-done thing; you can set up a legacy plan in advance, review and then update it at regular intervals.

Citigold Tactical 50_BLOGARTICLE_800x250

SingSaver Exclusive Offer: Get an Apple iPhone 15 Plus 256GB (worth S$1623.85) or S$1,200 Cash when you successfully apply for a Citigold account and make a S$250,000 deposit within 3 months of account opening and maintain these funds until gift fulfilment. Also, apply through SingSaver and enjoy 3.0% p.a. on a 6-month SGD Time Deposit. Valid till 2 June 2024. T&Cs apply.

Plus, get additional welcome rewards on top of the above offer (T&Cs apply):

  • Get additional S$100 Cash Reward from Citibank when you complete an Investment Risk Profile and Fact Find
  • Get additional S$100 Cash Reward from Citibank when you hold a valid Primary Citibank Credit Card
  • Get additional S$500 Cash Reward from Citibank when you apply for a Citibank Mortgage loan with min. loan size of S$800,000 within 3 months of account opening
  • Get additional S$250 Cash Reward for every S$50K purchase of investment and/or insurance from Citibank


Read these next:

A Guide To Leaving A Legacy In Singapore

A Full Guide To Priority Banking In Singapore (2023)

CPF Nomination

The Real Cost: Will Writing — How Much It Costs, Where To Go, And more

How to Plan For Your Retirement & Get Financially Fit

An ex-Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimise happiness and enjoyment in his life.

FINANCIAL TIP:

Use a personal loan to consolidate your outstanding debt at a lower interest rate!

Sign up for our newsletter for financial tips, tricks and exclusive information that can be personalised to your preferences!