You will be able to explain what a will controls and which assets pass outside it.
Kumar, from lesson 4.2, is 35, married, with a three-year-old daughter. He has thought hard about life cover, and he assumes that if he died, his wife would simply receive everything else he owns. She is his wife, after all. In Singapore that assumption is only partly right, and the parts where it is wrong are the ones that cause families months of paperwork and, sometimes, real hardship.
This lesson covers what a will does, what happens without one, and which of your assets a will does not touch at all.
A will is a written document that says who receives your assets when you die and who is in charge of making that happen. For non-Muslims in Singapore, wills are governed by the Wills Act.
A will does three main jobs. It names your beneficiaries, the people or organisations that receive your assets, and what each one gets. It names one or more executors, who collect your assets, pay your debts and hand out what is left. And if you have young children, it can name a guardian to look after them if both parents die.
That third job is the one parents most often miss. Without a named guardian, the family may have to sort out who raises the children, and if they disagree, the court decides.
For a will to be valid it must be in writing and signed by you in front of two witnesses, present at the same time, who also sign. A witness, or the spouse of a witness, should not be someone who receives anything under the will, because a gift to a witness can fail. You can write a will yourself, but many people use a lawyer so the wording and the signing are done properly. The requirements are set out in the Wills Act, and the Ministry of Law's website, mlaw.gov.sg, has guidance on making a will.
If a non-Muslim dies without a valid will, the estate is shared out under the Intestate Succession Act. The Act sets a fixed order of who inherits and in what shares. Which relatives survive you decides the split. It does not ask what you would have wanted.
For Kumar, the Act gives half of his estate to his wife and half to his daughter. That may sound fair, but his daughter is three. Her half cannot simply be handed to her. It has to be held and managed on her behalf until she is an adult, which is more paperwork and less flexibility than Kumar would want for his wife. Before anything is shared out, his wife would also have to apply to court for the right to deal with his estate, which takes time.
Other gaps are common. A partner you are not married to receives nothing under the Act. Neither does a friend, a charity or a stepchild you never adopted. If you want any of them to benefit, only a will can do it.
Several kinds of asset do not go through your will at all, however it is worded.
CPF savings are the biggest. A will cannot pass them on. They go to the people named in your CPF nomination, and if there is no nomination, the Public Trustee distributes them under the law. Lesson 8.2 covers this.
Insurance policies with a valid nomination are paid to the nominees directly. A policy with no nomination is paid into your estate and then follows your will, or the Act if there is no will.
Property held as joint tenants passes automatically to the surviving owner. Many couples buy their flat this way. If you own property as tenants in common instead, your share goes through your will. Your title deed or the HDB or Singapore Land Authority record says which you have. Joint bank accounts often pass to the surviving holder too, but this depends on the bank's terms, so check them.
Everything else goes through your will: bank accounts in your sole name, investments, a car, valuables, money owed to you.
Kumar's flat is held jointly with his wife, so it would pass to her directly. His CPF depends on his nomination, which he has not checked. His term policy names his wife. His savings account and his share account are in his name alone, so they are the part a will would decide.
For Muslims in Singapore, the distribution of an estate follows Muslim law under the Administration of Muslim Law Act. The shares that each heir receives are fixed by Islamic inheritance rules, known as faraid, and a Muslim can direct only part of the estate by a will. The Syariah Court issues the certificate that sets out who inherits what.
How CPF nominations, insurance nominations and jointly held property work for a Muslim estate has its own considerations. If this applies to you, check with the Syariah Court or an estate planner who handles Muslim estates before you rely on any of the rules above.
Before you think about wording or lawyers, though, you need a clear view of what you own and how each item would pass. Open your net worth sheet from lesson 1.3, because every asset on it belongs in one of three groups: will, nomination or joint ownership.
List your assets and mark which ones a will would control and which pass by nomination or joint ownership.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).