Legacy Planning: How To Build and Protect Your Legacy

This post was originally posted on Planner Bee.

Legacy planning isn’t only for the wealthy—it’s for anyone who wants to protect their assets and ensure a smooth handover to future generations. While those with significant wealth may have more to manage, legacy planning is essential for everyone to maintain family harmony and avoid disputes.

What is legacy planning?

Legacy planning is the process of managing and distributing your wealth and assets to ensure your family members and beneficiaries receive them according to your wishes, either after your death or if you become mentally incapable.

It’s particularly important if you have dependents, such as elderly parents, young children, or those with disabilities, who rely on you financially. Proper legacy planning ensures they are taken care of, even in your absence, and helps minimise any disruption to their lives.

Why is legacy planning important?

A well-thought-out legacy plan is more than just passing on money. It can provide financial security for your loved ones and give them clear guidance on carrying forward continuing your legacy. Without a plan, your family may face stress and legal complications, wasting time and resources trying to resolve issues after you pass.

By outlining how your assets should be managed, legacy planning helps to:

• Speed up asset distribution
• Reduce uncertainty for surviving family members
• Lower the chance of disputes over conflicting claims
• Protect your assets from outside parties
• Safeguard business interests and ensure smooth transitions
• Ensure your healthcare and decision-making preferences are respected

When is the best time to start legacy planning?

There isn’t a set time to begin legacy planning, but it’s a good idea to start when you have dependents who rely on you financially.

It’s also best to plan when you have a clear mind. As you get older, it can become more difficult to create a plan due to the increased risk of illness or accidents. Delaying legacy planning may mean you’re not in the right state of mind due to health issues, or you could overlook important details because of stress or urgency.

Starting early gives you enough time to plan, reconsider your choices, and consult a financial advisor for guidance on your legacy.

Legacy planning isn’t a one-time task. You can review and update it as your circumstances and needs change over time.

What is included in legacy planning?

Before you begin, you need to identify the assets you own. These can include:

• Liquid assets: Cash, savings, fixed deposits, and current accounts.
• Investments: Stocks, unit trusts, bonds, and properties.
• Personal assets: Cars, jewellery, antiques, electronics, art, and collectibles.
• Insurance: Endowment, whole life, term, investment-linked policies, and the Dependants’ Protection Scheme.
• CPF: Balances in the Ordinary Account, Special Account, Medisave, and Retirement Account.

Once you’ve identified your assets, you can start planning your legacy. The plan doesn’t need to be overly detailed or complex. It just needs clear directives on how you want your assets handled after you pass away.

In Singapore, legacy planning involves steps like drafting a will, making Central Provident Fund (CPF) nominations, setting up a Lasting Power of Attorney (LPA), and creating a trust. By planning early, you can ensure your wishes are carried out and your legacy is preserved as you intended.

Drafting a will

Writing a will is one of the most common ways to plan how your assets will be distributed in Singapore. It is a legal document that outlines what happens to your money and possessions after you pass away.

By creating a will, you have full control over how your estate will be divided. You can also specify who will look after your dependents and appoint someone or a company to manage and carry out the terms of the will.

Read more: Making a Will: What Is It, Why Is It Important, and What Happens When You Die

CPF nominations

As CPF savings cannot be included in a will, making a CPF nomination online or in person is the only way to decide who will receive your CPF balances after you pass away.

If you made a nomination earlier in life, remember that marriage will automatically revoke any existing CPF nomination. However, divorce, does not revoke it. You will need to make a new nomination when you get married or if your circumstances change after a divorce.

Without a CPF nomination, the Public Trustee’s Office will distribute the balances to your family members according to intestacy laws or, if applicable, your Muslim Inheritance Certificate.

Lasting Power of Attorney (LPA)

The Lasting Power of Attorney (LPA) is a legal document that allows you (the “Donor”) to appoint one or more people (the “Donees”) to make decisions and act on your behalf if you lose mental capacity.

Having an LPA means you can choose someone you trust to manage your affairs if you are no longer able to do so. Your Donee/s will be authorised to make decisions for you regarding personal welfare, healthcare, property, and financial matters.

Read more: Lasting Power of Attorney: What You Should Know

Setting up a trust

A trust is a legal arrangement where one person (the “Settlor”) transfers their assets to another party (the “Trustee”), who manages them for the Settlor or other beneficiaries.

Once assets are placed in a trust, they are no longer in the Settlor’s personal name. This means they cannot be frozen after death or go through probate.

However, not everyone needs a trust. It is most useful for those who want to protect assets from creditors, provide for children or beneficiaries with special needs, or ensure a smooth transfer of wealth without probate.

Advance care planning

Your legacy plan can also include instructions for your future health and personal care.

This part of the plan outlines your treatment preferences for doctors and caregivers to follow if you become seriously ill or injured and are unable to communicate your wishes. It forms an advance care plan that medical professionals can refer to during an emergency.

Business succession planning

For business owners, business succession planning should be part of your legacy plan. This includes identifying potential successors, creating succession plans, and ensuring a smooth transition to maintain business continuity.

This could involve buy-sell agreements, restructuring ownership, or setting up family trusts.

By planning ahead, you can work with legal and financial experts to create a succession plan that minimises disruptions and prevents legal disputes. It helps protect the business and ensures a seamless handover to the next generation of key stakeholders.

What happens if you don’t have legacy planning?

Without legacy planning, you may face complications, legal disputes, and financial difficulties for your loved ones. There is also the risk of your assets being distributed in a way you did not intend.

The law follows a fixed order of distribution, prioritising spouses, children, parents, and other relatives. If your intended beneficiaries don’t fit this structure, they may receive nothing. If you have no immediate family, your estate could eventually go to the state.

Without a will or legacy plan, your family will need to apply for a Letter of Administration. This process can take several months, delaying access to your assets. Such delays could cause financial strain, especially for dependents who need immediate funds for daily expenditures.

Read more: What Happens If You Don’t Have a Will

Planning ahead ensures that your legacy is passed on according to your wishes and helps prevent conflicts and confusion after your passing. A well-prepared legacy plan ensures your loved ones are cared for and your wishes are respected.

By taking action now and seeking professional guidance, you can create a secure legacy for your future generations.