Post-Mortem Finances – Will You Leave More Assets or Liabilities Behind?
Nothing in this world is certain except death and taxes. Although, we can learn to tackle our tax liabilities effectively over time, there is no room for personal damage control with the former. However, the legacy we leave behind is something we build in our lifetime that can endure even generations after we depart the world.
Singaporeans have a hard enough time bearing egregious living costs and juggling home loan repayments, education loans, business loans, etc. to make ends meet that they completely overlook the financial consequences of death. It’s not just life insurance one needs to worry about, but a variety of factors that could either lead to a handsome fortune for your loved ones or a truckload of liabilities.
Whether your spiritual karma meter entitles you to a place in heaven or not, it is essential to understand the gravity of financial situations that can occur in the aftermath of your demise and ensure your loved ones are not condemned to a financial hell in their lifetime.
Here are 4 nifty pointers to keep in mind in order to balance your assets and liabilities the way you would want to when you die:
- Reinforce your Joint Accounts with Mortgage Insurance
Having a joint account is the easiest way to leave as it does not cause any confusion. Joint bank accounts and investments can be accessed by the joint account holder without any need to apply for a grant of probate or a letter of administration. Basically, the joint account holder has an all access pass to the account irrespective of whether the one who has passed away has left a will or not. This is the good news.
The bad news is that if you are a part of a joint application for a personal loan and your loan partner dies, then you become the sole debtor. Good luck with that. Thus, it is always advisable to get adequate mortgage insurance while you are still alive so that you can keep you family and your loved ones safe long after you’re gone.
- Anticipate the Power of the Appointed Executor
In cases where the account was solely owned by the deceased, the executor will have to apply for a grant of probate or a letter or administration, depending on if the deceased has or has not left a will.
Once the executor gets legal authority, he can settle matters like credit card debts and personal loans, as well as sell the investments made by the deceased and also withdraw the balance from the account of the deceased.
Banks mostly come with a clause of what they would do in the event of someone’s death, incapacity or bankruptcy so the debts will have to be paid before withdrawing the account balance as the bank legally has the right to recover liabilities owed to it.
- Choose Your Beneficiaries Well
If there are beneficiaries of trust, then the trustees named will take over the to manage the accounts of the one who is no more according to the deed of trust, while the bank accounts named will be owned by that trust.
In case of insurance policies, the beneficiaries may inform insurance companies to receive payouts from policies bought by the deceased.
- Study the Interstate Succession Act
If the deceased passes on without a will or without a valid will while owning estates not more than $50,000, an application can be sent to the Public Trustees to administer the assets of the deceased, including bank accounts, CPF balance, and equity. The assets may be distributed according to the Interstate Succession Act.
The Interstate Succession Act will also be applicable in case one files for a Letter of Administration in court.
What You Need to Do In the Land of the Living
These are a few situations that may occur financially should one die. A few points that we can keep in mid while we are still alive are:
- Making a will
- Adding joint account holders for bank accounts
- Deleting joint account holders for personal loans
- Naming beneficiaries to your insurance policies
- Making a CPF nomination
If we keep these few things in mind, then the lives of our loved ones would become easier in the unfortunate event of our death. We might be hated while we are live but let us not be hated even after we die!