Estate Planning Can be Simple for the Middle Class

 

As a middle-class citizen, recognizing the broad range within this classification, doing estate planning is not only a necessity, it’s an obligation.

Estate Planning an intricate subject.

I've observed notable uptick in the number of financial planners distinguishing themselves as estate planning specialist recently. I’ve also seen the emergence of dedicated Financial Advisory firms and groups focused on estate planning. However, many of these offerings can be costly, particularly for much of the middle class in Singapore, including expats, permanent residents, and locals alike.

While the goal of estate planning is to minimize the financial burden on beneficiaries, the price of the process itself has become exorbitant. This creates a paradox where one may end up spending substantial amounts of money to structure their estates, potentially nullifying the intended cost-saving benefits for their beneficiaries. I attribute the main reason to the unnecessary over-leveraging to buy protection products and the costly establishment of a living trust.

Simple Will does it most of the time.

Typically, if you have confidence in your adult children's ability to handle financial matters responsibly and maturely, a basic will suffices for estate planning. Creating a simple will need not be expensive, often costing no more than a few hundred dollars. You can easily have it prepared by a law firm, individual with the requisite knowledge and expertise in will writing, or having an AI Will Writing Platform to write it for you.

Complexities may only arise if you possess immovable assets across borders, have family discord, or face uncertainties regarding tax implications posthumously. Additionally, individuals with higher net worth and a diverse family structure may require further estate planning considerations.

Setting up of a Living Trust

I personally find that the yearly fee needed to maintain the living trust can be better allocated elsewhere, such as towards retirement planning or purchasing term/whole life insurance policies unlocking more value to the testator and the nominees. Such life policies can then facilitate trust nomination at no additional cost.

It's important to note that this form of trust nomination differs from a living trust and is more akin to a testamentary trust which is a post-humous trust.

A living trust becomes essential however, if you aim to bypass the probate process, skirt pass personal obligations to creditors, protect your estate from mismanagement and safeguard your assets in the event of mental incapacitation. In the case of mental disability however, it might be beneficial to set up a Lasting Power of Attorney (LPA) instead.

Shield your young family from asset mismanagement without incurring annual fees

While a living trust can be effective in managing and protecting your assets during your lifetime, a testamentary trust serves as potentially vital tool to safeguard your estates for the well-being of loved ones who may not yet possess the maturity or expertise to manage them effectively. By incorporating a testamentary trust into your will, provisions can be made to shield assets earmarked for your loved ones, child or spouse from potential financial risks such as costly divorces or even creditors. Additionally, the appointment of a trusted third-party trustee to execute the directives, can ensure the preservation and responsible distribution of the estate within the respective duration. Moreover, establishing a testamentary trust incurs a one-time fee, usually integrated into your will during your lifetime, with potential ongoing charges by a third-party trustee only upon the trust's activation after your passing, bearing in mind that you can have your trusted family members manage it at no additional cost.