Will your beneficiaries be inheriting all your assets?

By Kelvin Tan

Recent newspaper articles have highlighted the importance of estate planning here in Singapore. While numerous countries like Malaysia, Hong Kong, India, Australia, New Zealand, Italy, Sweden and Canada have actually done away with such taxes. I wonder why is Singapore so slow in adopting good practices (like abolishing Estate Duties) or reducing personal income taxes, but fast in implementing and increasing GST taxes?

Anyway below are some news articles which highlight this issue.

March 11, 2007

Why estate duty should die a quick death

THERE was much disappointment among Singaporeans and tax experts when the much-hoped-for scrapping or tweaking of the estate duty did not materialise this year.

Instead, the Government has opted to postpone its decision over what to do with the tax until next year.

Some people reckon that it should be abolished. Their arguments include the following:

It's a double whammy for taxpayers: A taxpayer is taxed twice - once on his income which is used to acquire the assets and again on the value of his assets when he dies.

It's an unfair exemption limit for movable assets: The lower exemption limit of $600,000 on movable assets such as cash and shares means that many middle-income earners would be slapped with the tax.

And these are the people who may not be financially savvy enough to minimise the potential tax paid through estate planning.

March 11, 2007

Death can be taxing for the living

With rising affluence, more Singaporeans may find themselves having to grapple with estate duty

By Lorna Tan, Finance Correspondent

FOR such a sombre topic, the death tax has been generating some very lively debate of late.

It has continually popped up in Budgets over recent years, including the recent one, while letters about it were still appearing in The Straits Times Forum page last week.

The attention reflects the fact that increasing numbers of Singaporeans who do not consider themselves rich are waking up to the fact that they are not immune from the snares of the tax, which kicks in if a deceased person has assets over a certain limit.

March 11, 2007

What can be done to minimise estate duty?

Q MY BROTHER, 54, who was single, died last year. He had willed all his money to our mother, who is about 80 years old now. My younger brother, 41, and myself, 42, are also not married and are named as executors to the will. In all, he left behind about $1 million in cash and a commercial property that was under his name alone. There is a small outstanding mortgage on this property.

My question is whether this money is subject to estate duty if our mother were to die? If so, what can be done to reduce or avoid being taxed? Estate duty of about $32,000 has already been paid and the Letter of Probate obtained. The monies are now in a joint account under my brother's and my name.

Currently the best policy for estate planning is to plan now and review it regularly. Even if you give your assets away, be warned of the 5 year claw back! i.e. Should you die within the 5 years, your gifts will be taxable! Some wealth protection methods for planning your estate protection you can use are wills, trust, and gifts.

Contact us for more information and advice www.Abundance2Insure.com

Ricky Ng and Associates are Professional financial planners with expertise in life, medical, financial, retirement, estate and investment planning. Representing Great Eastern Life, one of the largest insurance company in Singapore.