Your legacy is not just about material wealth, but encompasses the values, knowledge and experiences you want to pass down. Succession planning organises your affairs to ensure a smooth transition of your assets and wishes after death or incapacitation.

What is Succession Planning?

Succession planning refers to the process of organising your personal and financial affairs to handle scenarios like death or mental incapacity. It ensures your assets are distributed according to your wishes and reduces potential burdens on loved ones.

Be it learning how to write a will, CPF beneficiaries and nomination, a trust, or lasting power of attorney, one should take the necessary steps to protect your wealth. While an uncomfortable conversation, we hope that we can help elucidate succession planning in Singapore appropriately.

The importance of planning

Without proper planning, your hard-earned assets could go against your intended distribution or face tax implications. A lack of directives may also burden loved ones with difficult decisions during an already emotional time. Proper succession planning reduces this financial and emotional toll.

5 key succession elements

A comprehensive succession plan should address:

• Will & testament
• Trusts
• Power of attorney
• Advance care plan
• CPF nomination

Can I do my CPF nomination online?

CPF online process

You can conveniently make your CPF nomination online using your SingPass. The online nomination service allows you to appoint beneficiaries to receive your CPF savings upon demise. It's a straightforward three-step process:

1. Key in details of your nominee(s) like full name and ID number.
2. Appoint two witnesses aged 21 and above with SingPass.
3. Review and confirm your nomination details.

Benefits of online CPF nomination

Making a CPF nomination online is free, secure and can be done from the comfort of your home. It provides better privacy protection as your nominee details are not revealed to witnesses.

The online process is quicker, allowing your loved ones to receive your savings in a timely manner after your passing. You can also easily review and update your nomination whenever your circumstances change.

Witnesses made easy

If you do not have two witnesses, you can visit a ServiceSG Centre where the officers can act as witnesses for your online nomination. This added convenience ensures you can complete the process smoothly.

Over 900 CPF members have already used the online CPF nomination service since its launch in January 2022. Without a nomination, your savings would be distributed according to intestacy laws, which may go against your wishes.

Making a lasting power of attorney in Singapore

What is a lasting power of attorney?

A Lasting Power of Attorney (LPA) is a legal instrument that allows you to voluntarily appoint one or more people (donees) to make decisions and act on your behalf for personal welfare and property matters, if you lose mental capacity in the future. 

According to the CPF Board, making an LPA is an important part of legacy planning in Singapore.

Why make an LPA?

Without an LPA in place, your loved ones may face difficulties in managing your affairs and making decisions for you if you become mentally incapacitated. An LPA ensures your wishes are respected and relieves the emotional burden from family members during already difficult times.

Appoint trusted individuals

When making an LPA, it is crucial to appoint assignees you trust completely to act in your best interests. You can appoint different assignees for personal welfare matters versus property and affairs. Consider their ability to make tough decisions aligned with your values.

Plan ahead

Like other aspects of legacy planning such as CPF nominations, making an LPA while you have mental capacity is wise. Regularly review your LPA to ensure it accurately reflects your current circumstances, especially after major life events like marriage or divorce.

Nominating CPF beneficiaries

Why nominate CPF beneficiaries?

Making a CPF nomination allows you to specify who will receive your CPF savings and the share each nominee gets upon your passing. This provides peace of mind knowing your CPF funds will be distributed according to your wishes. Nominating beneficiaries also ensures a quicker and easier process for them to claim your savings without additional costs or delays.

What is covered under a CPF nomination?

A CPF nomination covers your Ordinary, Special, MediSave and Retirement Account savings as well as any remaining CPF LIFE premium balance after deducting payouts. It also includes discounted Singtel shares purchased using CPF in 1993 and 1996.

However, your nomination does not cover properties bought using CPF savings, Dependants' Protection Scheme payouts or investments made under the CPF Investment Scheme.

How to make a CPF nomination

You can easily make an online CPF nomination by providing details of up to 15 nominees and two witnesses aged 21 and above with Singpass access. The two witnesses cannot be your nominees.

Alternatively, you can visit a CPF Service Centre to nominate more than 15 beneficiaries. Be sure to review and update your nomination regularly after major life events.

The importance of having a nomination

Without a valid CPF nomination, your CPF savings will be transferred to the Public Trustee's Office for distribution based on intestacy laws. This process can take up to 6 months and incur administrative fees, contrary to your wishes.

Furthermore, around 4 in 5 CPF members who passed away in 2022 had made a nomination to allow their loved ones to receive their savings swiftly as intended.

Writing Your Will and Testament

What is a will?

A will is a legal document that sets out your wishes for the distribution of your assets and belongings after you pass away. It ensures your assets are distributed according to your preferences, rather than being subject to Singapore's intestacy laws. Without a will, your CPF money may not go to your intended beneficiaries. A will provides clarity and can prevent potential disputes among loved ones.

Key components

Your will should cover a few key elements:

• Appointment of an executor to manage your estate
• Instructions on distributing assets like property, investments, and personal belongings
• Naming legal guardians for any minor children

Specifying beneficiaries for insurance policies or CPF savings

It's crucial to review and update your will periodically, especially after major life events like marriage, divorce, birth of children, or acquiring new assets. An existing will is automatically revoked upon marriage, so creating a new one is essential.

The process in Singapore

Creating a will in Singapore is straightforward. You can draft it yourself or engage a lawyer. The key requirements are being at least 21 years old, of sound mind, and having the will witnessed and signed by two impartial parties. Consider making a separate CPF nomination to specify beneficiaries for your CPF savings.

While drafting a will requires some effort, it provides immense peace of mind knowing your assets will be distributed according to your wishes after you're gone.

Creating a Trust

What is a trust?

A trust is a legal arrangement where one person (the settlor) transfers assets or property to another person (the trustee). The trustee holds and manages these assets for the benefit of specific beneficiaries designated by the settlor. It serves as an estate planning tool to distribute your wealth according to your wishes after death.

Types of trusts

There are various trust structures you can choose from based on your specific needs:

• Discretionary trust: Trustees have discretion and flexibility over how to distribute assets and income to beneficiaries.
• Fixed trust: Assets/income split is pre-determined for beneficiaries with no trustee discretion.
• Life interest trust: Assets pass to final beneficiaries only after death of the life tenant.

Advance care planning for future healthcare needs

Taking control of your medical decisions

As we age, it becomes increasingly important to plan for potential healthcare needs and ensure our wishes are respected. Advance care planning (ACP) allows you to document your preferences for future medical treatment should you become unable to communicate them directly.

Nominating a healthcare spokesperson

A crucial step is appointing a trusted individual as your nominated healthcare spokesperson (NHS). Choosing someone who understands your values and priorities is key to ensuring your advance care plan reflects your true desires.

The advance care plan

The outcome of the ACP discussions is a formal advance care plan - a documented record of your treatment preferences in various scenarios. This guide ensures your values are respected by healthcare professionals if you cannot communicate them yourself due to serious illness or injury.

Consult with a trusted financial advisor

By taking the time to create a comprehensive plan now, you're not only protecting your wealth but also sparing your loved ones from potential conflicts and financial burdens. Whether you're approaching retirement or already enjoying your golden years, now is the perfect time to take action.

Consult with a trusted financial advisor or solicitor to help you navigate the complexities of succession planning in Singapore. 

After finalising a succession plan, you can consider other retirement strategies for Singapore like decumulation or bucketing.

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Next on the Endowus Fin.Lit Academy

Read the next article in the curriculum: How to retire well in Singapore

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