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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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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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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.

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The Role of Executors and Trustee (Part One)

When a family member passes away leaving a Will, the appointed Executor will step in to act as the personal representative of the deceased to carry out the wishes under the Will.

“…the executor has the duties to “call in” the estate, i.e. collect and converts the assets into cash and thereafter, to settle all the funeral and testamentary expenses, estate duty, and debts. When the executor completed these duties, he/she has discharged the duties as an executor and steps into the shoes of a trustee. In short, both the executor and the trustee owe a fiduciary duty to the beneficiaries and also to creditors of the deceased’s estate.”

– Lee Yoke San & Another v Tsong Sai Cecilia & Another
[1992] Singapore High Court

https://www.preceptsgroup.com/will-writing-services/

Appointing an executor or trustee can be a cumbersome process. One may have to look into the aspects of credibility, accountability and availability of an individual in carrying out the duties of an executor or trustee to gather, transfer and distribute the assets of the deceased. Even after much thought by the Testator (the person who made the Will), the appointed executors may renounce their appointments if they were too busy, unfamiliar with the process or emotionally unable to carry out their duties upon the demise of the testator. The following are some illustrations where appointing a professional trust company is a better proposition than appointing family members as executors and trustees.

Licensed trust company | PreceptsGroup

Precepts Trustee as a pioneer in estate planning business with its expertise in estate and trust administration will continue to grow and be a leader in this industry in the region. We have regularly received enquiries on the appointment of executorship and trusteeship for the estate of the deceased or living trusts.

Checks and Balance

As a licensed trust company, Precepts Trustee is regulated by Monetary Authority of Singapore. There are multiple layers of checks and balances in the management of the Estate and Trust monies. There are controls exercised at many levels and all personnel, namely the Estate Officer in Charge, Resident Manager, Accounts Department, Senior Management and Trustee Board. Multiple signatories are required for any pay out from the trust. In contrast, if an individual is the trustee, the risks of misappropriation, mismanagement and fraud is significantly higher. This is especially critical when there are young children, vulnerable or elderly beneficiaries.

Effective Estate Administration Process

Delays in administering the deceased’s estate will attract higher legal fees. A professional trust company has the expertise and responsibility to administer the estate expeditiously. Individual executors may not have the technical knowledge to manage and administer certain estates. For instance, in a recent case Precepts Trustee was appointed as administor for a deceased’s estate, which involved initiating a legal action against third parties.

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

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Estate Administration for Insolvent Estates

How The Case Unfolded

This case unfolded with Robert’s call to Precepts looking for help. In the call, Robert* informed us that he had been appointed as the sole executor and trustee of his late mother’s Will. According to Robert, his mother did not appoint any other executor, since Robert was the sole beneficiary. However, he wanted to renounce his right to apply for the Grant of Probate. He wanted Precepts to take over his role in administering his late mother’s estate as he was facing a lot of stress and anxiety in the estate administration.

As the Will was not drafted by Precepts, we held a meeting with Robert to better understand the situation. He disclosed that his businesswoman mother had encountered some financial difficulties just before her passing. As a result, his mother had left huge liabilities behind. After studying the case, Precepts tabulated that her estate’s liabilities were projected to be greater than the remaining assets of the estate.

The Beginning of Robert’s Nightmares

Ever since the creditors discovered he was the named Executor of the Estate, they started going after Robert to demand for re-payment of his mother’s debts. He received numerous calls from various banks’ collection departments almost every single day. He was also informed by the banks that late payment for his mother’s credit card debts and the legal fees would continue to accrue until full settlement!

He also realized that he would unlikely benefit from the Will as his mother’s estate was insolvent. He had no peace of mind. He was very concerned that the property which was owned in his name (he purchased with his own money together with his wife), could be taken away by the creditors. He was so pressured that he started to believe he had to sell his own house to settle the debts.

The Appropriate Actions Taken By PreceptsGroup

After Precepts was appointed to act as the administrator, the creditors started to deal with Precepts, and not Robert. The phone calls to Robert ended over time. It had been a long process for Precepts to deal with the banks and to meticulously verify each of the creditors’ claims. It was something Robert had not been able to do so. The estate also received claims from the Inland Revenue Authority of Singapore (IRAS). After Robert’s mother’s house was sold, the net sale proceeds were used to first settle the IRAS claim before the balance debts and liabilities were paid proportionally to the respective claims admitted by Precepts.

Robert was also relieved to find out that he could claim the money which he had advanced for his mother’s funeral expenses (with supporting documents), as this claim had priority before the rest of the creditors.

After Robert relinquished his right and appointed Precepts as the administrator of his mother’s estate, he and his wife were able to resume their lives normally again.

*Name and facts have been modified for privacy purposes.

This article is first published on our newsletter, The Custodian Issue 11 on April, 2019. Click here to subscribe to our latest newsletter.

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5 Issues to Take Note When Addressing Overseas Assets in Your Singapore Will

Have you considered engaging will writing services in Singapore? Over the course of your life, you may have acquired overseas assets for investment purposes, as a family holiday home, etc. You may wonder what happens to your overseas assets when you pass on? Can you include them into your assets to pass on to your loved ones? And how do we go about doing it? If you have assets, such as bank accounts, properties, or jewelry located overseas, writing a Will on your own can be hard.

In this article, we will touch on the issues you have to take note of when dealing with your overseas assets in your Estate Planning. This will come in handy to those who are looking at how to manage their overseas assets when planning out their Wills and Trust for their family.

You can include overseas assets to your Singapore Will. In fact, testators (people who create Wills) often do this as it may be more convenient as compared to drafting two separate Wills for your assets in two different countries. However, there are 5 issues you have to take note before you decide to include your overseas assets in your Singapore Will.

Making a will in Singapore | PreceptsGroup

  • Your overseas immovable property is subject to the laws of the jurisdiction it is located in

 

This means that all immovable properties, such as houses, land, condominiums will be subject to the laws of the jurisdiction that the immovable property is located in. For example, if you create a Will in Singapore, the house you own in America that was listed in the Singapore Will would still be subject to and dealt with according to the American law. Your beneficiary, the person who inherits your property, will thus have to pay relevant taxs for the property, as specified by the American inheritance tax rules.

Writing a will in Singapore | PreceptsGroup

2. Your overseas moveable assets are subject to the laws of the jurisdiction where you are domiciled in

This means that all moveable properties such as money in bank, accounts, cars, and jewelry will be subject to the laws of the jurisdiction of the country that you are domiciled in.

What is a domicile? The domicile is the country which a person officially has as their permanent home, or has a substantial connection with.

Hence, if you write a Will in Singapore, any overseas movable property mentioned in the Will would also be subject to Singapore law. If you create a Will in Malaysia, overseas movable property mentioned in the Malaysia Will would be subject to the Malaysian Law.

If you die domiciled in Singapore and you create a Will in Singapore, any overseas movable property mentioned in the Will would also be subject to Singapore law. Even if you created a Will outside of Singapore, such as with the creation of a Malaysian Will to cover your movable assets in Malaysia, such property is subject to the law of your domicile i.e. Singapore law and not Malaysian law.

Will writing services in Singapore | PreceptsGroup

Will Writing Singapore | PreceptsGroup

  • The “resealing of probate” in other jurisdictions

 

When you write a Will in Singapore, the executors of the Will whom you have appointed must apply to the Singapore court for a “Grand of Probate (GP)”, which will give them the power to carry out the instructions in the instructions in your Will.

However, when your Will includes assets (whether movable, immovable or both) located in another country’s jurisdiction, that jurisdiction must “reseal”, or give legal recognition to, the probate that your executors were granted in Singapore. Only then will your executors have the same power to carry out your instructions in relation to your overseas assets.

Note that Commonwealth jurisdictions, such as Australia and Malaysia, can typically reseal probate granted by a Singapore court. If a jurisdiction rejects your application for the resealing of probate, you will likely be treated as having died intestate (i.e. having died without making a Will), and your overseas property will be subject to the inheritance laws of whichever jurisdiction your property is located in.

Note that the resealing of probate involves its own separate court application, and thus involves more costs. The extra costs involved is one of the reasons why testators sometimes choose to create separate Wills for the assets that they hold in different jurisdictions instead of having just one Singapore Will which includes their overseas assets. A much easier process is to engage in a professional Estate Planning company that will have the expertise and experience to help you in managing the Will writing and distribution of assets both in Singapore and overseas to benefit you and your loved ones efficiently.

Another point to note on dealing with foreign investments is that the Will may need to be translated into the language of the jurisdiction, which can be quite costly. Hence it will be better to create separate Wills for the different jurisdictions and appoint a corporate executor and trustee to manage the overseas legal process.

Will writing services in Singapore | PreceptsGroup

4. Other jurisdiction may not recognise your Will

Another risk of including your overseas assets in your Singapore Will is that sometimes other jurisdictions may not recognise your Singapore Will. Consequently, you will not be able to have that Will executed in that jurisdiction according to your wishes.

In general, jurisdictions that do not follow Common Law, such as Indonesia and Thailand, might not recognise a Singapore Will.

In contrast, Common Law jurisdictions, such as the United Kingdom and New Zealand, will generally recognise a valid Singapore Will. However, this is also dependent on whether the jurisdiction in question:

  • Accepts the formal validity of the Will; and
  • Accepts the terms of the Will.

In relation to these two factors, a common law jurisdiction may sometimes accept that a Will is formally valid (i.e. it complies with the jurisdiction’s legal requirements for making a Will), but also refuse to accept the terms of the Will because they conflict with other national laws or regulations. This results in the Will not being recognised by the jurisdiction.

For example, if you were to leave all your United Kingdom assets to charity, a person who can show that they were financially dependent on you can apply to the United Kingdom court under the Inheritance (Provision for Family and Dependants Act) 1975 to challenge the terms of your Will.

If they are successful in their application, the term in your Will stating that all your United Kingdom assets should be donated to charity would not be accepted, and a portion of such assets could be allocated to the applicant instead.

Will writing services in Singapore | PreceptsGroup

5. You can have multiple Wills in different jurisdictions

It is possible to have multiple Wills in different jurisdictions. However, this must be managed carefully so that the Wills do not supersede each other. The different Wills must be drafted

carefully, and it will be a complicated process.

For example, there could be an instance where your beneficiaries may not want to manage your overseas assets. You may have properties in Malaysia, but your children may have no interest in living in Malaysia at all. In this case, you may do the following to manage your assets in Malaysia:

  1. A) appoint a professional trustee to manage the asset
  2. B) appoint one or two beneficiaries as the Trustee for that asset

Advantages of having separate Wills in different jurisdiction includes:

  • Both Wills can be probated at the same time
  • Overseas Will is already written in the language of the country, which can save cost on translation
  • The Will drafted will be recognised in their own respective countries
  • Different states, different province may have a different legal process and interpretation of the Will (as pointed out in point 5)

For professional Trustee and Wills Writing services, you can engage PreceptsGroup to help with your Estate Planning and Business Succession needs. We have expertise built on more than 20 years of experience and we are dedicated to providing comprehensive planning and solutions for wealth distribution, wealth succession, estate administration for individuals and families.

This article is first published on our newsletter, The Custodian Issue 15 on September, 2020. Click here to subscribe to our latest newsletter.