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Guardianship in a Will

When a parent has any minor children aged under 21, one of the priorities when writing a Will would be to make a provision for a trusted friend or family member to look after the welfare of his minor children upon their demise. In the Will, he would specify this person(s) as the guardian(s) of his children either to act upon demise of both parents, or jointly with surviving parent.

1. What if the Will does not indicate a guardian?

If both parents have passed on and there are no Will or instructions in the Will regarding appointment of guardians for minor children (aged 21 and below), any person may apply to the Court to be guardian of the minor children. If there is more than 1 person applying for the guardians, the Court will decide on whom should be the guardians, or they act jointly. It will be lengthy process where social workers appointed by the Court will have to submit a report to the Judge for consideration. Thereafter, the Court will grant guardianship with foremost regard to the children’s welfare.

This can cause potential conflicts between family members who may not agree with the arrangement. The father’s side and the mother’s side of family may fight for the guardianship of the child in the court.

2. What happens if nobody applies to be guardian?

In the worst-case scenario where nobody steps forward to apply to be guardian, the minor children may have to be placed in foster care till it is determined if anyone will step forward. Subsequently, the child or children will be placed in an orphanage. In some unfortunate scenarios, children will be split up into different foster care, orphanages or one child may be adopted while the other is left in the orphanage.

Hence, it is advisable to appoint a guardian in the Will to avoid causing extreme distress to the children upon the demise of their parents. Doing so will also minimize costs and anxiety for family members who likes to take care of the child.

3. What is the role of a guardian?

A guardian has the responsibility of the long-term care of the children. He/she has the right to make decisions related to the welfare of the children. He/she will effectively have overall responsibility for the child, including:

  1. Choosing and providing for his education
  2. Providing shelter and care for him
  3. General maintenance i.e., clothes and food
  4. Consenting to any medical treatment for him and
  5. Providing support for him – emotional as well as financial

A guardian may not be the person who necessarily has daily care and control of the child.

4. What kinds of guardianship are there?

There are 2 kinds of guardianship:

  1. Natural Guardian – In the event there is a surviving parent, section 6 (1) and (2) of the Guardianship of Infants Act (GIA) stipulated that the surviving parent will be the natural guardian. He can act either alone or will act jointly with any guardian appointed by the deceased spouse in their Will.
  2. Testamentary Guardian – A testamentary guardian is appointed in the Will and need not be biologically related to the children.
    1. Main Guardian – In the Will, a Sole Guardian can be appointed to act in the event of the demise of both parents.
    2. Joint Guardian/s – In some cases, the testator may want to appoint a joint guardian. This guardian could act jointly with the surviving parent, or with another guardian (e.g., a guardian appointed by the other spouse). In such scenarios, all guardians must unanimously agree on every point relating to the children’s upbringing. This can cause potential conflicts, so it would be wise to choose the guardians carefully.
    3. Substitute Guardian – A substitute guardian may be appointed to replace one of the main guardians, when he/she is not able or willing to act as guardian. Especially when only one guardian is appointed, it is wise to include a substitute guardian in the event the appointed guardian(s) are unable to fulfil the role for any reason.

The role of a guardian is one of great responsibility. It is advisable to have a chat with your appointed guardian(s) to let them know your intentions before adding them into your Will.

5. Is the guardian responsible for the expenses of the children?

Under the Woman’s Charter, Sections 68 and 70, the law states it is the duty of the parent or guardian of a child to maintain or contribute to the maintenance of the children. In other words, the guardians are expected to use their own monies to care and maintain the children under their care, regardless if the guardian has daily access to the children.

Hence it is essential to have a Will that provides the guardians or surviving parent access to the deceased’s estate monies for the care of the child.

By: Laura Hoi
Estate & Succession Planner, Trust Introducer
Precepts Legacy
STEP® Affiliate Member, COT® Qualifying Member 2021, Life Member MDRT®

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Appointing the Executor and Trustee

Who do you engage?

The spouse, children or immediate family members are often the logical choice for the appointment as executors and trustees. But today, many decide that an independent professional trust company may be preferred as an alternative to the appointment of a family member. This has often proven on hindsight to be the preferred solution. Another reason is the newly imposed regulations on individual trustees as discussed at 11.13 (Transparency and Effective Control Regulations). In any case, the newspapers are full of articles reporting cases where family members ended up taking each other to Court. Often, the disputes revolve around family members who act as joint executor and trustees.

Where joint executors and trustees are appointed, they must act unanimously in the discharge of their office responsibilities. Sometimes, they cannot agree and this can lead to delays in estate administration, potential litigation and other issues. See 4.9, the example in Lau Tyng Tyng v Lau Boon Wee, where a sister and her brother were appointed as the joint executors and trustees in the Will of their late father.

It is possible that a professional trust company be appointed as the default executor and trustee in the event that the family member who is appointed may himself be deceased or unwilling or incapable of acting as such.

Some criteria in selecting a suitable executor and trustee are as follows:

  • Is the person responsible and trustworthy? Assess his character as manifested by his living habits and lifestyle.
  • Is he in good health and likely to outlive the testator?
  • The organizational skills of the person.
  • His experience in managing and investing assets and also consider the types of assets to be managed.
  • Does he get along with his family members?
  • Would he be biased against certain beneficiaries?
  • Is he likely to accept the job as it means taking up his personal time in administering the estate?
  • Is he likely to expect a fee or remuneration as this is a voluntary role?
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Legal Requirements for Valid Wills

There are some basic legal requirements for a will to be valid under the Wills Act (Cap 352).

  • The testator must be at least 21 years old and of sound mind. Persons under 21 years old and in active military service or a mariner or seaman, can still prepare a will. These are known as “Privileged Wills”.
  • The will is to be in writing and signed at the end by the testator.
  • The signature of the testator must be at the foot of the will as any writing below the signature will not be valid.
  • At least two witnesses are to be present to witness the signature of the testator and in the presence of each other. They should in the presence of the testator, also sign as witnesses.
  • Beneficiaries under the will are prohibited from signing as witnesses to the will. Spouses of beneficiaries also fall within this prohibition. The will is not rendered invalid but these beneficiaries or their spouses who are the witnesses, will not be entitled to any gifts in the will.
  • For validity, the testator must have the necessary testamentary capacity to make and execute the will meaning that he must be of sound mind when he executes the will.
  • In general, a will shall be treated as properly executed if its execution conformed to the internal law in force in the territory where it was executed or of his domicile when the will was executed or when he dies or of the territory where the testator was habitually resident or the state where he was a national (see the “Formal Validity” rules in section 5 Wills Act).

The Strict Requirement for a Minimum of Two Witnesses

In AEL and others v Cheo Yeoh & Associates LLC and another [2014] SGHC 129 the will was invalid as it did not comply with the formalities required under the Wills Act. A fundamental requirement is that for a valid will, it must be executed by the testator in the presence of a minimum of two witnesses. The will was found to be witnessed by a sole witness, namely by the lawyer himself, Johnny Cheo and therefore was not in compliance with the law.

This resulted in quite a different distribution basis from that stipulated under the terms of the will. At stake were the distributable assets in Singapore, an amount of AUD1.8 million in a Citibank Account. With the invalidity of the will, some of the named children under the will got less than what were due to them and the grandchildren were totally excluded altogether under the intestacy laws.

As a result of the alleged negligence, those aggrieved beneficiaries claimed about AUD719,000 from Mr Ali’s lawyer and his firm Cheo Yeoh & Associates. The sum represented the difference between what they would have received under the will and what they received eventually. On the other hand, the two children not named in the will had a windfall, while the other saw an increase in his share. They did not sue the lawyers.

In another decision, Harshenin v Khadikin (2015 BCSC 1213) the Supreme Court of British Columbia held a will invalid on the grounds that the propounder had not “discharged his burden of showing, on a balance of probabilities, that the alleged will was duly executed by the deceased”. It was not established that “two witnesses saw the deceased signed or acknowledged his signature on the alleged will”. The judge also stated that there was no reliable evidence that the deceased “read and appeared to understand the alleged will”.

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Challenges faced by Executor and Trustee

“I did not receive one nickel of the money and yet my reputation was tarnished!”- the voice of a Toronto accountant who acted as an executor and trustee for her client’s multimillion-dollar estate, as she burst into tears. If she was aware of the legal implications and responsibilities as an executor and trustee, she would not have agreed to it.

Generally, when a loved one passes away, a family member may be appointed in the deceased’s will as the “executor and trustee” of the estate. This person has the fiduciary and statutory duty of care to make sure that he distributes the assets to the beneficiaries of the estate according to the wishes of the will of the deceased. It requires his utmost diligence, good faith, and loyalty in the discharge of his duties.

Amongst his many duties, besides avoiding any conflict of interest while administering the estate, the executor is to prepare an accurate inventory of items in the estate to ensure that nothing of value is hidden from creditors, that one party has not unfairly taken a piece of property belonging to the estate at the expense of other beneficiaries. If he acts without care and causes loss or detriment to the estate, he will be liable to be sued. Even the closest families can be torn apart by problems that arise in the management of an estate.

Many newspaper articles have reported cases where family members ended up taking each other to court. In a recent case, two women had out of good faith and compassion, agreed to be joint executors of a woman’s will. They were found liable to the woman’s son for $87,000. In VJ and others v UVH and others and another [2020] SGCA 49, the brothers appointed as executors and trustees were sued in court for breaching their trustees’ duties in making personal gains by nondisclosure of material information to their sisters, trust funds under their care. In other cases, executors were found liable when they had acted dishonestly and obtained personal gain.

During the administration of the estate, there are also proper procedures for an executor or trustee who wishes to resign or retire. In Chan Chi Cheong v Chan Yun Cheong [2020] SGHC 43, the individual trustee had to resort to the assistance of the court in order to resign from the office.

What is the solution

The testator should carefully consider the person he wants to carry out the executor and trusteeship role in his will. Is the intended lay executor and trustee equipped with the skills of managing the assets? Is he a responsible and trustworthy person? Is he biased against certain beneficiaries? Is he likely to expect a fee or remuneration to perform his role?

Would it not be better to appoint professional executors and trustees over a lay executor and trustee? The administration of an estate can be complex and the person entrusted to carry out the role may himself be deceased or unwilling or incapable of acting as the executor and trustee. By appointing a professional trust company as the default executor and trustee, it will avoid or prevent the various undesirable disputes among the testator’s family members after his death.

Do not worry, call PreceptsGroup, our professional estate and succession practitioners and legal counsel will offer you the solutions to your estate planning concerns.
 
This article is first published on our newsletter, The Custodian Issue 15 on September, 2020. Click here to subscribe to our latest newsletter.

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The Need for Business Succession Plans

While the concept of having a Business Continuity Plan (BCP) has been around for quite a while, the question of feasibility and sustainability has of late become an urgent and important consideration. Beyond this short-to-mid term BCP in response to the global health threat, it is necessary for business owners to consider a broader strategic scheme of things.

Regardless of company type, the importance of planning for the sustainability of business should not be taken lightly. A business is often the most valuable asset of a person, but many business owners don’t have a comprehensive succession plan for their businesses.

We often look to large organisations and think of strategies to increase the market share but often overlook the longevity aspect of the brand. Large organisations such as Microsoft, Tata Group have always had good succession plans that ensured smooth transition after the baton is passed to the next in line. For the family-run businesses or small and medium-sized enterprises (SMEs), this is even more critical as involving ‘outsiders’ into the family business can present major operational or business risks.

The Harvard Business Review earlier this year illustrated “Family business sequels have similar traits to cinematic sequels. But in the family business, it’s not sets and costumes that are reused; it’s ownership structures, role descriptions, and decision-making processes. On paper, defaulting to a family business sequel makes perfect sense. After all, what worked for the senior generation should work for their children, right? Enacting sequels also often offers the path of least resistance: it doesn’t require the senior generation to change their own responsibilities in anticipation of succession (or after), or to change how their organizations make decisions. But that path can lead to significant challenges.”

Proper business continuation and succession planning involving a Business Value Protection Trust (BVPT) can help prevent a business from being frozen and discontinued in the event of adversities to the key person(s). A sound business succession plan ensures a proper exit strategy without compromising on the value of the business, enabling a smooth transition and strong business interest.

The common top-line objectives for businesses are liquidity, sustainability, and control. Not only does a BVPT protect the interest of the other business co-owners, but it also helps avoid conflict among family members and their surviving business owners.

Without the guidance of a trained estate practitioner, many business owners simply give their company shares of the business and split them up among his children in his will.

In non-family businesses, the spouse of the deceased key person may become a partner of the company despite being unfamiliar with the business landscape. Further complications such as differing views and expecting to be consulted are likely to disrupt the business.

For family-owned businesses, a Private Trust Company (PTC) structure can be optimally employed together with a will and standby trust in place to ultimately hold the family business. A PTC operates like a holding company (of the family assets) cum trusteeship, with the appointed successor managing the company.

There is also a need for planning an exit strategy for disinterested shareholders when the key person is unable to continue being in control. Speak to our estate and succession practitioners to find out more.

In helping business owners to grow and protect their businesses, our estate and succession practitioners will help to evaluate risk factors, protecting assets from creditors, and ensure their heirs benefit from the rightful distribution of assets.

Why is there a need for business succession plans? | PreceptsGroup
 
This article is first published on our newsletter, The Custodian Issue 14 on March, 2020. Click here to subscribe to our latest newsletter.

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The 6 Great Misconceptions of Trust

When the word “trust” is mentioned, it is likely that this term will go over the heads of majority of Singaporeans. That’s because of the common perception that it is a subject reserved for discussion among only the ultra-high net worth community. In this piece, we will attempt to provide a clearer understanding of what a trust is, and debunk the misconceptions that are stopping individuals from taking full advantage of its benefits as an estate planning instrument. Depending on the objectives of an individual, some trusts have a more complex structure, but the bulk of most are used in very direct and practical ways.

WHAT IS A TRUST?

Imagine you’re holding on to a bowl of candy. Before leaving the house for a weeklong work trip, you hand this bowl over to your spouse together with a set of instructions on how you want your candy to be distributed to your children. If you are concerned that your children aren’t disciplined enough to ration the candy on their own (and worry they may gobble up everything at once), your instructions to your spouse could include giving them one candy each after mealtime for the entire week.

Similarly, the archetypal trust is a legal arrangement by which you, the owner (“settlor”) of the assets, create the trust and appoint another party whom you trust (“trustee”) to manage your assets according to your instructions (“trust deed”) for the benefit of the loved ones (“beneficiaries”) you have listed down in the trust deed.

So figuratively, the bowl of candy is like a trust.

How to set up a trust in Singapore | PreceptsGroup

THE 6 MISCONCEPTIONS

Before you decide to bury the idea of trusts as a potential solution for your estate planning, here is a list of common misconceptions that many people have about trusts which may encourage you to reconsider setting one up for yourself. You’re not alone if you find yourself falling into one or more of these categories.

Misconception #1: Trusts are Only for the Wealthy

This is perhaps the most common assumption about trusts. While it is true that many wealthy people set up trusts, many in the middle-income group make full use of the benefits of a trust for a variety of purposes in their estate planning. In general, a trust is set up to ensure the estate does not become misappropriated.

Misconception #2: A Trust is Expensive

While there are set-up fees payable, a trust need not be actively administered or managed by the trustee. For example, with a standby trust, one only needs to pay a one-time set-up fee upon creation. Thereafter, there are no on-going trust administration fees until the standby trust is activated, usually upon the occurrence of a triggering event, e.g. death or mental incapacity of the settlor, when assets are transferred into the trust.

Misconception #3: Trusts are Complicated

Usually, setting up a trust is not as confusing as it seems. Depending on your estate planning goals, you can set up a trust that is as simple or as complicated as you want it to be. All you need is to list down your objectives – whether it is for protection of assets, provision of funds or anything else – and exactly how you would want the trust to work for you.

Have a chat with your estate planner so that he/she may take you through the process for easier understanding. The last thing you would want to have is a trust that doesn’t serve its purpose.

Misconception #4: A Trust “Locks Up” Your Assets

Again, it depends on what your requirements are for setting up a trust. As stated above, with a standby trust, you need not settle any assets into the trust until a triggering event (such as death) has occurred. Meaning during your lifetime, you retain control over your assets.

If you wish to set up a trust and immediately settle assets into the trust, you may retain the power to revoke the trust (revocable trust) which allows you to withdraw your assets if you change your mind.

Misconception #5: A Will is Enough. There’s No Need for a Trust.

A will is required to undergo the process of probate, which grants the executor authority to deal with the deceased’s estate. Without the probate, the executor cannot execute what is written in the will. Also, wills can be challenged and may cause unnecessary delays in the execution of your wishes. In addition, your will will become a public document once it has gone through the probate process.

A living trust does not need to go through the process of probate, so the release of the trust assets to the beneficiaries will be made within a shorter period, in exactly the way you want it to. arguments over assets can be avoided as well because whatever has been instructed by the settlor will be done. Furthermore, should one set up a trust, there is strict confidentiality among the beneficiaries.

Misconception #6: Family or Friend Makes for a Better Trustee

Understandably, people would choose to appoint a close family member or friend as their trustee. After all, who else would make a better choice, right? Unfortunately, many fail to understand the huge amount of work and responsibility they will take on should they agree to act as a trustee. In addition to creating potential tensions within the family, there are also legal implications if the trustee’s role is not fulfilled properly.

A suitable alternative would be to appoint a trust company. This solution shifts the workload entirely to a neutral party who has the expertise and capability to manage the settlor’s estate. Any disagreements regarding the distribution of assets will then be significantly reduced.

WHAT WE SAY

It is important to evaluate your list of assets, decide what your goals are and how you want them to be managed after passing on. After which, a chat with an estate planner would be in order, to help you understand the processes and provide you with the right support before setting up a trust for yourself.

Disclaimer: Any information in this feature is intended to provide only a general understanding of trusts. It should not be misconstrued as material to be used for advice of any kind especially with regards to financial, legal, or tax-related practices. Should you need further advice relating to your estate planning, do approach our consultants to discuss how to structure your trusts according to your requirements.
 
This article is first published on our newsletter, The Custodian Issue 12 on September, 2019. Click here to subscribe to our latest newsletter.

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Demystifying the Concept of Offshore Companies

By Pardeep Singh, Head of Precepts Corporate Services

Offshore companies are popular options for business owners due to varying reasons and there are currently over 40 regions that offer offshore companies. An offshore company is incorporated in a jurisdiction other than the jurisdiction that constitutes its main place of operations or where the company’s principal investors reside. In a broader sense, offshore simply means a jurisdiction other than your home country of operations.

These low tax jurisdictions are located in various strategic locations all over the world and they encourage foreign investors to set up such companies in their territories. In order to attract the capital of foreign investors, the majority of serious offshore areas guarantee by their law the operation of these companies, the security of the foreign investments made, as well as the protection of information.

The principal advantages of incorporating an offshore company include tax benefits, simpler reporting requirements, ease of company setup and ongoing administration, etc. The choice of a particular jurisdiction for offshore company incorporation is an important decision as it can have a significant impact on your business.

What are the key benefits of having an offshore company?

Asset Protection

By protecting assets in combination with a Trust, an offshore company can avoid high levels of income, capital and death taxes that would otherwise be payable if the assets were held directly.

Confidentiality

Offshore Companies offer privacy to the investors.

Estate Planning

Family and Protective Trusts (possibly as an alternative to a Will) for an accumulation of investment income and long-term benefits for beneficiaries on a favourable tax basis (without income, inheritance or capital gains taxes).

Simplify the transfer of assets and properties held in several countries

An offshore company can hold multi-jurisdictional assets and properties conveniently and ownership can be transferred by company shares. International Tax Planning Conduct business with low or no corporate taxes.

Reduce payroll and travel expense administration

With proper tax planning, offshore companies can protect the investment in other foreign countries. International Companies can loan funds to corporations in other foreign countries. This can be especially important when working in countries with strict exchange controls and high tax profiles.

Conduct business as an international entity

International Companies have the same rights as a person and can make investments, buy and sell real estate, trade portfolios of stocks and bonds, and conduct any legal business activities.

Minimise tax exposure when dealing with international transactions

Maximise profits from intellectual property rights, franchising, and licensing

An offshore company can franchise or license intellectual property rights in other foreign countries, allowing the profits to accumulate in a tax-free environment.

Protect investments in other foreign countries

International Companies can loan funds to corporations in other foreign countries. This can be especially important when working in countries with strict exchange controls and high tax profiles.

Common Misconceptions of Offshore Companies:

Offshore Business is illegal

This is false; offshore business is a legal and highly regulated industry in many jurisdictions such as Singapore and Hong Kong. An offshore entity is simply one that does not conduct business in the jurisdiction that it has registered in.

Offshore business is a new trend

The activity has a long history and is nothing new amongst international business owners. Some writers claim that offshore activity began as early as over 200 years ago.

Offshore Companies are in remote exotic Locations

When someone mentions about offshore company formation, people often think about far away, lesser-known countries such as the Bahamas, Cayman Islands, Dominica, Mauritius, or the Marshall Islands. Admittedly, those countries are some of the best places to incorporate a business offshore due to their legal and taxation systems.

However, where to incorporate your offshore company would generally depend on the location of your customers and suppliers, how they perceive the country, and specific activity of the business.

Tax reduction is the only benefit

Tax reduction and minimisation are some of the major benefits but other aspects such as requirements for company administration, dispensation with an audit, or the ease in the manner of conducting shareholder and director meetings could be considered as reasons for setting up these structures.
 
This article is first published on our newsletter, The Custodian Issue 14 on March, 2020. Click here to subscribe to our latest newsletter.

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Helping Families through our Estate Administration Work

Over the years, we have helped many families in administrating their family members’ estates. In some cases, the estate administration was extremely challenging. The complexities involve dealing with various parties, the court, litigation, or multi-faceted groups of beneficiaries. We have seen many lay executors suffer prolonged stress and anxiety over many years before considering appointing us as Executor and Trustee.

More than 2500 of our clients have chosen to appoint us as their Executors and Trustees under their Wills. We now highlight some of the cases that we have administered.

Estate of PB

A high-profile Senior Executive, Mr. PB passed on the operating table during treatment in December 2009. He had a Will appointing two of his close friends as the executors. However, both renounced their rights to apply for the Grant of Probate – one of them was in a state of grieve and the other was a busy Senior Executive. The executors and the beneficiaries (family members) came to seek our assistance and consented to our appointment as the professional administrators of the estate of Mr. PB.

In 2011, we initiated an action to sue the doctors and the clinic for damages and loss of inheritance that the dependants of Mr. PB had suffered.

The legal proceedings involved complex technical and medical issues and went on for a period of 5 heart-wrenching years before the first judgement. We had to employ relevant specialists to contest the case and to guide the family members each step of the way. In 2016, the Court of Appeal allowed our claim for damages amounting to $3.698 million. However, the legal proceedings did not end here.

After the Court of Appeal’s judgment in 2016, the taxation proceedings went on for another 2 years for the court to decide our claims on the amount of legal costs incurred for bringing the action to sue the doctors and the clinic. In 2019, the court allowed the legal costs in the amount of $756,000. It took 10 years for the case to be concluded. If not for our appointment, it would be a huge strain and pain for the family members and the lay executors.

Estate of WCF

It should be noted that the duties of a personal representative of a Deceased’s estate may involve him making decisions to sue on behalf of the estate but also face the prospects of defending legal suits against the estate. The personal representative may also potentially risk being sued for the failure of fiduciary duties.

WCF passed away in 2016 leaving a Will appointing us as his professional executor. In February 2019, we received a letter of demand from a firm of solicitors claiming for an amount of about $2 million against the WCF’s estate.

As a professional executor, we examined the merits of the litigation suit thoroughly. After examining our deceased client’s position, we attempted to settle the matter amicably in the best interests of the Estate. After effective negotiations, both parties agreed to engage a professional accounting firm to prepare a report to determine a reasonable claim amount to resolve the matter out of court and avoid engaging in litigious proceedings. We are glad that we were able to assist the family in managing the undue stress from dealing with such complex legal matters.

Estate of WLC

WLC passed away in 2000 leaving a Will appointing both of his two sons as the executors of his estate. Unfortunately, the two lay executors only extracted the Grant of Probate for their late father’s estate in 2008, after 8 years.

After obtaining the Grant of Probate in 2008, the two lay executors who were not aware of the complications and risks of delaying administration to liquidate a house in which their late father was the 50% registered owner.

In 2016, the lay executors finally decided to sell the house when all the funds in their late father’s estate had been fully utilised for the maintenance of the house. But they could not proceed as the other co-owner of the house had lost his mental capacity and therefore unable to sign any documents.

The lay executors were left with no other alternative but to spend additional costs to commence Deputyship Proceedings to appoint a Deputy for the co-owner. This resulted in protracted proceedings as there was little cooperation from the co-owner’s relatives.

Yet in another twist, in the midst of the Deputyship Proceedings, the co-owner passed away. The sale of the house was furthered delayed as it now required an administrator of the deceased co-owner’s estate to be appointed. They were struggling to maintain and manage the house due to these legal constraints and the financial demands to pay for legal fees.

The lay executors were relieved to discover our services. They approached us to take over the administration of their late father’s estate as they had advanced a lot of money for the Deputyship Proceedings out of their own pocket. Most significantly, they were also facing constant pressures from the various beneficiaries who demanded for the sale proceeds of the house. They were also under constant accusations of mismanaging the executorship appointment and faced potential legal risk exposure for negligence.

Upon acceptance of the estate administration case, we proceeded to complete the administration of their late father’s estate, including liaising with the administrator of the deceased co-owner. Our efforts helped them to finally complete the sale of house in 2017 at $1.8 million. With our professional discharge as administrators, we prepared statements of the estate account and made the distribution of the sale proceeds of the house to all the beneficiaries satisfactorily. The two brothers were finally relieved of an issue that had hung over their heads for some eighteen years.

Estate of SAG

SAG appointed us the professional Executor in his Will.

SAG was the sole shareholder and the sole director of a company that is still in active operation and generating good profits. The company employed a sizable group of employees at the point of his death. The value of his company shares was worth about $2.7 million at his death.

When SAG passed away, most of the company transactions had to be put on hold and the company account was frozen as SAG was the only signatory for the company’s bank account. Further, the company was not able to tender for new contracts, which was crucial for the business. It was a very worrisome and anxious period for many of the employees in the company.

SAG’s business was vulnerable as they could lose their business to competitors or the employees leave the company due to uncertainty. So, we had to act fast.

We acted quickly and stepped in to stabilise the company operations and to resolve the internal conflicts in the company. We appointed key persons to head up the company’s operations under our supervision.

We managed to obtain the Grant of Probate within 2 months and brought the company back to its normal operations.

One year after SGA’s demise, a formal valuation was carried out by professional valuers and SAG’s company shares were valued at $7.8 million. We were glad to have preserved the value of the business and also the livelihoods of so many employees.
 
This article is first published on our newsletter, The Custodian Issue 13 on February, 2020. Click here to subscribe to our latest newsletter.

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Estate Case Sample: Estate of MMK

The Beginning of a 4-Year Long Legal Case

In one of the more prominent cases we’ve had in recent years, the Estate of MMK case ended after a long-drawn-out 4 years of legal proceedings. It began in January 2015, when the Deceased passed away after a 2-year battle with cancer. She named her best friend as her sole executrix in her last Will, signed in 2013. After her passing, her best friend, who did not reside in Singapore and without experience in administering estates, appointed PreceptsGroup to take over her role.

How The Will Dispute Started

Before filing for the Grant of Probate, PreceptsGroup made a surprising discovery – a “Mr. K” claiming to be the next of kin of the Deceased (he was not named as a beneficiary in the last Will of the Deceased), had applied for the Grant of Letters of Administration. This was done on the basis that the deceased had died intestate and that he was the sole beneficiary under Singapore’s Intestate Succession Act.

The Immediate Action Taken by PreceptsGroup

With the original last Will in hand, PreceptsGroup immediately filed for a Probate Caveat* to arrest the situation, preventing Mr. K from proceeding. If this had been delayed, Mr. K would have ended up taking over the entire estate.

A Questionable Revocation Document Was Produced

PreceptsGroup requested for Mr. K to withdraw his application. However, after 6 months of communication between solicitors from both sides, Mr. K sprang a surprise. In an unexpected turn of events, Mr. K produced a document, claiming that the Deceased had signed it 6 days before her demise, to revoke all her earlier Wills.

This newly produced revocation document was not an updated Will by the Deceased, but a one-liner to revoke all her earlier Wills. If it was valid, her last Will signed in 2013 would have been revoked and her entire estate transferred to Mr. K.

It was highly suspicious that the revocation document was produced only after 6 months. There was no logical reason as to why the Deceased would have signed it before her demise. She had lived through a continuously acrimonious relationship with Mr. K. To add to our doubt, the only witnesses present during the signing of the document were those related to Mr. K.

Handwriting Experts Were Brought In

With a genuine desire to protect and preserve the interests of beneficiaries named in the Last Will of the Deceased, PreceptsGroup commenced a legal proceeding against Mr. K for all the relevant issues to be tried in court. The revocation document was sent to a handwriting expert for examination, together with specimen signatures of the Deceased, which took 2 years to gather from her ex-employer, insurance companies, banks, court, and other authorities.

A Long-Awaited Victory for PreceptsGroup

The legal proceedings went on for another 2 years and in 2019, everything was eventually settled. After receiving favorable results from the handwriting expert, the other party agreed for PreceptsGroup to carry out the wishes of the Deceased stated in the Will.

The Key Takeaway

What could have been a simple estate matter turned into a complicated one. Many do not expect to face onerous responsibilities when taking on an executor’s role. In reality, the challenges can be massive in some cases. If the best friend of the Deceased handled this case without passing it on to PreceptsGroup, abandonment of the case is almost guaranteed when stress levels and legal fees surge. This would have resulted in all the beneficiaries named in the Will being disinherited by the revocation document produced by Mr. K. It is, therefore, advisable to appoint a suitable person to be the executor of your Will
 
This article is first published on our newsletter, The Custodian Issue 12 on September, 2019. Click here to subscribe to our latest newsletter.

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The Role of Executors and Trustee (Part Two)

Segregation of Personal Monies with Estate/Trust

One of the most common issues for the individual executor or trustee is the failure to identify, divide and segregate the assets accordingly from the deceased’s estate account and their personal account.

This is especially so if the individual trustee needs to manage the estate monies and properties for young children & vulnerable elderly beneficiaries for many years, even up to decades. If the individual executor or trustee passes away before completing the estate administration process , the estate of the deceased may be mixed with the individual executor’s estate.

Keeping Record of Estate Account

Another problem is the failure in keeping proper accounts and records of the deceased’s estate. The executor or trustee is required to keep records of the estate account to show the in-flow and out-flow of monies and assets received under the deceased’s estate. Failure in rendering a proper estate account could lead to legal action and the estate monies could also be depleted due to unnecessary administration expenses and legal fees.

Conclusion

Appointing a trustworthy, accountable and unbiased party to act professionally as the executor or trustee has become a serious concern for most people. When a person writes their Will, they should consider appointing a professional trust company as the main Executor or the substitute Executor in cases where the main Executor is unable or incompetent to act.

Recent Estate Administration cases by Precepts

  • Challenging the validity of a forged deed of revocation and obtaining forensic reports relating to authenticity of signatures on documents.
  • Successful claim for damages in reported decision in medical negligence in high profile case.
  • Estate administration involving mediation convened at the Singapore Mediation Centre with a view to settlement.
  • Settlement of estate duties with the IRAS for deceased person dying intestate prior to 2008.
  • Dealing with and payment of estate and trust income taxes to the IRAS.
  • Application for Beddoe orders prior to litigation.
  • Application of Benjamin orders where beneficiaries are presumed to be missing or deceased.
  • Appointment as administrators to sell real estate assets and distribution of joint property owned by deceased and a mentally incapacitated co-tenant.
  • Administration of insolvent estates and distribution according to the First Schedule of the Rules as to Payment of Debts Where Estate Is Insolvent under the Probate and Administration Act.
  • Administering estate with family disputes involving an Eviction Order and Write of Possession.
  • Distribution of estate property to the deputy/administrators of beneficiaries who are mentally incapacitated or deceased.
  • Sale of private residential properties as part of trust administration in Singapore and Malaysia.
  • Transmission of title of assets of deceased’s estates relating to real estate and company shares to beneficiaries.
  • Administration of estate with overseas properties in Cambodia, Hong Kong, Thailand and etc.
  • Appointment as administrator through Letter of Administration De bonis Non.
  • Estate administration relating to deceased persons dying domiciled in Singapore and resealing of Probate in Malaysia.
  • Estate administration relating to deceased persons dying domiciled in Malaysia and taking up probate in Hong Kong.
  • Estate administration of deceased dying due to unnatural cause with difficulties claiming from relevant insurer.
  • Handling estate with tax disputes and management of the tax liabilities.
  • Involvement in citation proceedings relating to upholding validity of a Will.
  • Purchase of Residential Property as trustee for occupation by estate beneficiary in exercise of powers under S12(3) Trustees Act and setting up of property trusts.
  • Provision of loan upon security of charge over property to estate beneficiary in exercise of powers under S9 Trustees Act.

 
This article is first published on our newsletter, The Custodian Issue 7 on October, 2017. Click here to subscribe to our latest newsletter.