7 Steps to Prepare your Estate Plan

In the previous blog post (Do I need Estate Planning), we have explored what estate planning is, and some key objectives of estate planning. Now that you are clearer about what we hope to achieve, let's explore the high-level steps involved in estate planning. You should go through this process on our own first, consolidating the necessary information before meeting up with a professional estate planner or financial adviser to implement the complete plan. This post will only provide the overview of the steps, which will be elaborated in future posts.

Step 1: Ensure Estate Surplus

First, take stock of all your assets (home, car, stocks, savings accounts, fixed deposits etc), deduct away your liabilities (debts, mortgages, loans, bills etc) and verify if there is a surplus.

Step 2: Ensure Estate Liquidity

Secondly, review the list of assets you have to determine how liquid they are. "Liquid" here means that the asset can be converted to cash (to pay for required expenses) within 1-7 days and not incur a hefty penalty on the converted value. For example, many structured deposits may result in a loss of principal if it needs to be cashed in earlier to meet an emergency expense.

Step 3: Plan Your Estate Wisely

Thirdly, consider how you would like to handle the various assets and who should receive them when you are no longer around. Some questions to ask yourself here are:

• Who do you want to give to?
• Who do you NOT want to give to?
• How much should you give?
• In what manner should you give: in a lump sum, in instalments, upon specific events?

Step 4: Write a Will

Next, after you have done the above homework, you will need to effect all the above plans into Will. This is one of the most crucial steps, otherwise, all the above plans will not be accomplished upon your demise. Choosing the right parties to help with this is also vitally important as your intentions need to be correctly reflected in your Will, otherwise your wishes may not be carried out. Remember, your Will will be interpreted by third parties, specifically, the courts and thus should be worded carefully.

Step 5: Register Your Will & Keep It Safely

The next important and easily overlooked step is to safe-keep the Will so that those who need to access it at the appropriate time (namely, your beneficiaries), will know where to get it. Here's we'd consider different methods of how and where to keep your Will (and other related documents), and their pros and cons.

Step 6: Consider Other Tools

As a follow on from drafting your Will, you should also consider the following issues:

• If you have concerns about leaving behind large sums of money and assets to beneficiaries who may not have the know-how or have the ability to own those assets (e.g. children cannot directly own assets like houses and stocks), you may need a Trust.
• If your concerns are with the type and amount of medical intervention to be applied to you when you are unable to make decisions for yourself, then an Advanced Medical Directive (AMD) is something to consider.
• If you are concerned with how you would be looked after and how your assets are managed when you have lost mental capacity, then a Lasting Power of Attorney (LPA) is the instrument to use.
• Finally, the Human Organ Transplant Act (HOTA) affects how our organs can be used after our demise.

Step 7: Review Your Plan

Finally, after you have gone through the entire process and implemented your estate plan, you should take time to periodically review those plans. Various events or milestones in our lives, may require us to adjust the earlier plans we have made to accommodate these changes. For example, when we get married, when we have children etc.