Saturday, 15 August 2020

I Finally Made My Will and LPA – It Is So Important!

Last month, after almost a decade of first saying I want to make my will, I finally did it. Thanks to a close friend who end of last year reiterated to me, the importance of it. 


I have made my Will and Lasting Power of Attorney (LPA) at PKWA Law firm. My lawyer is a very friendly, informative, and accommodating, and without any air. I paid SGD500 for the Will and SGD300 for the LPA. Now there is a promotion probably due to the Covid with a promotional price of SGD590 for both.

By the way, you must be at least 21 y.o. to make the Will and LPA.

 

SO IMPORTANT TO MAKE YOUR WILL AND LPA

 

It is so important to make your Will and LPA, so that you are clear to your Beneficiary(s), and also that your Executor(s) or Donee(s), can have a faster authority to act on your behalf. If you do not have a Will and LPA, decision on how to handle your assets, will be subjected to Public statutory acts which will take longer time to come into effect.

 

For instance, if you lose your mental capacity to make decision and you have not made an LPA, you next of kin will not automatically be your Donee. This means that your family members are not given the right to make legal decisions on your behalf. This can hinder the ability for them to care for you, as they may face challenges to manage your bank accounts, properties etc.

 

If you have not make a Will or LPA, the Public acts kick in, and the authorities will take a longer time to verify the legal beneficiaries. For e.g. if you have an outstanding mortgage as sole-borrower,  there exist possibility that before the time whichever Public acts verify the legal beneficiaries, the bank may already claim default on your property mortgage repayments. Then the bank will have the right to foreclose your property.

 


WILL

 

Definitions:

·    Testator – the person making the will

·    Executor 1 - the person legally responsible for executing the will

·    Executor 2 – backup in case Executor 1 shall pre-decease.

·    Beneficiary – the person receiving the will

·    Legal guardian 1 – the person responsible for taking care of deceased's children below 21 yo.

·    Legal guardian 2 – the backup guardian in case Guardian 1 shall pre-decease.

 

The making of a will in Singapore is governed by the Wills Act (click here). 

 

·    The will must be written (or typed)

·    The will must be with testator’s and 2 witnesses’ signatures at the foot of the will. The 2 witnesses must be present to witness the signing of the will in the presence of the testator.

·    The 2 witnesses present must not be beneficiaries (person (s) receiving the asset(s) of the prepared will. (in my case, the two witnesses, are the two lawyers from the law firm.)

 

Executor can also be the beneficiary. Executors can be stated to act jointly or severally. Executor can also be the trustee, but trustee is not necessary is the executor.

 


PROPERTY WITH OUTSTANDING MORTGAGE

 

Note: If you are the sole-proprietor of your Property with outstanding mortgage, the property it cannot be listed as your asset to distribute to your beneficiaries. The bank is still the owner of the house.

 

However, the Executor/Executrix can decide on behalf what he/she want to do with the Property(s).

 

1st Scenario: Your executor has access to your funds and it is sufficient to pay off the outstanding mortgage (immediately) to own the house. Or if there is an insurance payout, then it can be used to pay down the outstanding loan. 

o   For private properties, you can buy the Mortgage Reducing Term Assurance (MRTA) Insurance, if you are qualified.

o    For HDB flats, you are protected by the Home Protection Scheme (HPS) which is mandatory, which is like an insurance.

o    Note, however, that HPS is not mandatory for Executive Condos (ECs)

 

2nd Scenario: Your executor has access to your funds but not enough to pay off the mortgage. In this case, the most likely option is to sell the property and distribute the proceeds to the beneficiary/beneficiaries.

 

3rd Scenario: Your beneficiary/beneficiaries is/are able to assume the loans and continue with mortgage.

 

4th Scenario: Your beneficiary/beneficiaries is/are unable to assume the loans or pay mortgage, banks have the rights to fore-close the property. 

 

To understand more about what happen to the debts when you die, refer here.

 


CPF

·    CPF is not as part of will. 

·    In case you wanted to nominate a beneficiary, you need to do a CPF nomination.

·    Refer to CPF website (click here).

·   If you have NOT make a CPF nomination, your CPF money will be distributed via intestacy laws (i.e. law of a person passing away without will). For E.g NON-Muslims,

 

o   if you have a spouse and 2 children, you spouse will get half of your wealth, and your 2 children will equal portion of the other half.


o   If you have spouse (no child) and 2 parents, then you spouse will get half of your wealth, and your 2 parents will get equal portion of the other half.

 

Refer to Singapore Intestate Succession Act for more info (click here) or Moneysense website (click here)


·    For distribution via Intestacy laws will take time to locate the legally-entitled beneficiaries, and a fee will be payable to the Public Trustee's Office to make the distribution.


 

LPA (LASTING POWER OF ATTORNEY)

 

LPA allows you to appoint someone whom you trust (called the donee) to manage your finances and your welfare if you should suddenly become mentally incapacitated (certified by a doctor).  

 

Definitions:

·    Doner – The person making the LPA

·   Donee (s) – The person/people making decision of the Doner in case he/she lose his mental capacity to make decision.

·    Replacement Donee 1 – Backup to Donee in case Donee shall pre-decease.

·    Replacement Donee 2

·   You can choose what decision powers to grant to your donee(s). E.g. Personal Welfare, Property & Affairs or Both

·    If you have more than 1 donee, you can choose to have:

o   Jointly - donees have to act together, cannot act separately.

o   Jointly & Severally - donees can make decisions together or separately. Both types of decisions are valid.

 

Refer to MSF website (click here)

 

Differences between LPA, Power of Attorney and a Will.

 

·    LPA will only come into effect when you lose your mental capacity (not death).

·    Power of attorney allows your Attorney to act on your behalf when you still have mental capacity.

·    Will come into effect, only after death.

 

If you do not make an LPA, and subsequently lose your mental capacity to make certain decisions,

 

·    the Mental Capacity Act allows someone else to apply to the Court to either:

o   make the specific decisions for you, or

o   appoint one or more persons to be your deputy to make a decision for you.


·    Refer to Mental Capacity Act (click here)

 

 

CLOSING

 

Upon preparation and completion of the will, you shall keep a copy of it in a safe and yet accessible place, and inform your executor(s) and your family about the will.

 

For LPA, the law firm will help you submit to Office of Public Guardian, and records are hold there. 

 

 

 

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