Question About Inheritance

[meekiatah]

Folks

Need advice here.

I'm in my 50s, not a very old age, but because of my deteriorating health, I'm taking this issue seriously.

My wife is Indonesian. Over the years she's been with me, she's proven that she can lead a frugal lifestyle in the event that I'm not longer around.

But, I can also see that, she can't manage having access to a large sun of money. On 2 occasions, she managed to save up to $20k - $30k, and when circumstance arises that she can settle using money that she's saved, gone...

For example, in the past year, her family has housing issue in Indonesia, she deep into her saving and bought a house in her hometown. But, due to budget (or rather limited funds) concerns, she had to settle for a house in the suburb.

As she's using her own money, I did not interfere.

What I would do differently, I will rent a 2br house for her family (of 2 pax only) for a year. It's not expensive, probably only S$1,000 in today's exchange rate. And save the $25k+, using the interest earned to pay pff the rental.

Granted, it's a different feeling renting a house vs owning a house, but as she's still working in Sg, she can add to her savings and slowly find a house in a better location, although that might cost more than the $20k one that she bought.

Anyway, she's proven that she can live the frugal lifestyle. I trust that. But, I don't trust her relatives.

Hence, I'm seeking advice here.. how can I pass her my assets on my demise, but not in 1 lump sum. I'm talking about S$700k here, CPF and other assets included. Rather, I'm seeking to provided her with a sum that she need monthly to survive. From her own words, she need about S$800 monthly. Other than the S$800, she may only draw on the money for emergencies like illness.

I know a trust fund may be a solution here, but given that I'm only talking about $700k, is it a reasonable amount to set up a trust fund?

Any comments? Or I'm trying to do too much for too little..? I'm just worried that the money will be gone shortly after I pass away, and she end up in a position worst off then she is, before I die. After all, currently I'm doing a lot gatekeeping for her. And, when the pressure gets too much for her, she tends to react emotionally and give up...

*** Headache ahh ... **"


No Signature...

 

[BBCWatcher]

I'm in my 50s, not a very old age, but because of my deteriorating health, I'm taking this issue seriously.
My wife is Indonesian. Over the years she's been with me, she's proven that she can lead a frugal lifestyle in the event that I'm not longer around.

But, I can also see that, she can't manage having access to a large sun of money. On 2 occasions, she managed to save up to $20k - $30k, and when circumstance arises that she can settle using money that she's saved, gone...
[....]
Hence, I'm seeking advice here.. how can I pass her my assets on my demise, but not in 1 lump sum. I'm talking about S$700k here, CPF and other assets included. Rather, I'm seeking to provided her with a sum that she need monthly to survive. From her own words, she need about S$800 monthly. Other than the S$800, she may only draw on the money for emergencies like illness.
I know a trust fund may be a solution here, but given that I'm only talking about $700k, is it a reasonable amount to set up a trust fund?

You could buy her a guaranteed escalating life annuity, either immediate or deferred, from a high quality insurer.

If she is a Singapore Permanent Resident then CPF-related options are available, notably funding her CPF Retirement Account (when she turns 55). She would then receive a monthly income for the rest of her life, and she can start those payouts from age 65, age 70, or any time in between. However, if she ceases to be a SPR then she would be forcefully ejected from CPF, and she'd receive a lump sum residual. So this isn't a great option if you have concerns about the durability of her SPR status in Singapore.

If you have such concerns, or if she's not a SPR, then there are several private insurers in Singapore that sell escalating life annuities. Here's one recent list. "Shop around." In this situation I think I'd look for these features:

• Lifetime monthly payouts. She should receive reliable income for her entire life, however long it lasts. However, a residual is not necessary. If you/she want to convey assets to someone else (child, grandchild) then it's probably best to do that with other assets.
• High quality insurer. Check the credit worthiness of each insurer.
• Singapore dollar payouts. Although U.S. dollar payouts are available from some insurers, I think SGD is a better payout currency for these purposes since it's where she will live (or at least closer to where she will live if she relocates to Indonesia).
• Escalating payouts. For example, if payouts increase at 3%/year, that's great. It would help her fight inevitable inflation.
• The ability to buy with a single premium. If you feel she needs more, you could buy a second life annuity from a different life insurer using another single premium. If you want near-instant peace of mind in this respect then a single premium does that.
• Guaranteed payout amounts. Don't pay much attention to the "if the stars align and the wolves don't howl, then here's what you might receive" projections. Focus on what the insurer is guaranteeing as the minimum payouts.
• Some reasonable flexibility in terms of when payouts start.
• No "cash out" provision. It's strictly a life annuity, not something the beneficiary can sell or surrender.

Ideally she'll be onboard with this plan. She probably has to be to some degree at least since it'd be her life annuity.

 

[reddevil0728]

You could buy her a guaranteed escalating life annuity, either immediate or deferred, from a high quality insurer.

If she is a Singapore Permanent Resident then CPF-related options are available, notably funding her CPF Retirement Account (when she turns 55). She would then receive a monthly income for the rest of her life, and she can start those payouts from age 65, age 70, or any time in between. However, if she ceases to be a SPR then she would be forcefully ejected from CPF, and she'd receive a lump sum residual. So this isn't a great option if you have concerns about the durability of her SPR status in Singapore.

If you have such concerns, or if she's not a SPR, then there are several private insurers in Singapore that sell escalating life annuities. Here's one recent list. "Shop around." In this situation I think I'd look for these features:

• Lifetime monthly payouts. She should receive reliable income for her entire life, however long it lasts. However, a residual is not necessary. If you/she want to convey assets to someone else (child, grandchild) then it's probably best to do that with other assets.
• High quality insurer. Check the credit worthiness of each insurer.
• Singapore dollar payouts. Although U.S. dollar payouts are available from some insurers, I think SGD is a better payout currency for these purposes since it's where she will live (or at least closer to where she will live if she relocates to Indonesia).
• Escalating payouts. For example, if payouts increase at 3%/year, that's great. It would help her fight inevitable inflation.
• The ability to buy with a single premium. If you feel she needs more, you could buy a second life annuity from a different life insurer using another single premium. If you want near-instant peace of mind in this respect then a single premium does that.
• Guaranteed payout amounts. Don't pay much attention to the "if the stars align and the wolves don't howl, then here's what you might receive" projections. Focus on what the insurer is guaranteeing as the minimum payouts.
• Some reasonable flexibility in terms of when payouts start.
• No "cash out" provision. It's strictly a life annuity, not something the beneficiary can sell or surrender.

Ideally she'll be onboard with this plan. She probably has to be to some degree at least since it'd be her life annuity.

but technically those plans can be surrendered right?

 

[ericcsn]

Yes. Great advice from BBCWatcher.

You could go to say OCBC (or any bank) and buy an annuity on her behalf so that she gets life long monthly payments.
For example https://www.ocbc.com/personal-banking/insurance/great-lifetime-payout

 

[BBCWatcher]

but technically those plans can be surrendered right?

I think that's an important detail to check.

If you want to combine charitable giving with financial support for a surviving loved one then something called a charitable remainder trust is an option. In this arrangement the charity sets up the trust and pays a stipulated variable, fixed, or escalating lifetime income stream to a beneficiary. (Preferably escalating, I suggest.) Upon the beneficiary's demise the charity receives its share, and the arrangement ends. Universities with large endowments frequently offer CRTs, for example.

There are some advantages with this approach. One obvious advantage is that you help a charity you care about. Also, many charities (especially large charities) can set up these trust arrangements at much lower cost than otherwise. And many charities are extremely reliable trustees; several universities are literally centuries old. Moreover, you often have greater flexibility in terms of the payout currency if that's useful. The charity will of course recognize you publicly if you wish. If for example you want a university lecture hall named after your beneficiary, it's only a question of whether the CRT is big enough. Sometimes there are tax advantages, although that's probably less important in Singapore. And because you've committed to a charitable donation it's not something a beneficiary can undo; CRTs are ordinarily irrevocable. The charity has an obvious interest in preserving its contractual rights to its share.

CRTs fit within the broader category of "planned giving," so you may see that term on charities' Web sites. "Contact our planned giving office," for example.

I should also mention that the government provides a service called the Special Needs Trust Company (SNTC). The SNTC's trust services are available to Singaporean citizens and Singapore Permanent Residents with special needs. This is a subsidized trust service to look after special needs individuals after their caregiving loved ones pass on. "Special needs" is defined fairly broadly. The minimum initial funding requirement for an SNTC Trust is only S$5,000.

 

[singaporean11]

Folks

Need advice here.

I'm in my 50s, not a very old age, but because of my deteriorating health, I'm taking this issue seriously.

My wife is Indonesian. Over the years she's been with me, she's proven that she can lead a frugal lifestyle in the event that I'm not longer around.

But, I can also see that, she can't manage having access to a large sun of money. On 2 occasions, she managed to save up to $20k - $30k, and when circumstance arises that she can settle using money that she's saved, gone...

For example, in the past year, her family has housing issue in Indonesia, she deep into her saving and bought a house in her hometown. But, due to budget (or rather limited funds) concerns, she had to settle for a house in the suburb.

As she's using her own money, I did not interfere.

What I would do differently, I will rent a 2br house for her family (of 2 pax only) for a year. It's not expensive, probably only S$1,000 in today's exchange rate. And save the $25k+, using the interest earned to pay pff the rental.

Granted, it's a different feeling renting a house vs owning a house, but as she's still working in Sg, she can add to her savings and slowly find a house in a better location, although that might cost more than the $20k one that she bought.

Anyway, she's proven that she can live the frugal lifestyle. I trust that. But, I don't trust her relatives.

Hence, I'm seeking advice here.. how can I pass her my assets on my demise, but not in 1 lump sum. I'm talking about S$700k here, CPF and other assets included. Rather, I'm seeking to provided her with a sum that she need monthly to survive. From her own words, she need about S$800 monthly. Other than the S$800, she may only draw on the money for emergencies like illness.

I know a trust fund may be a solution here, but given that I'm only talking about $700k, is it a reasonable amount to set up a trust fund?

Any comments? Or I'm trying to do too much for too little..? I'm just worried that the money will be gone shortly after I pass away, and she end up in a position worst off then she is, before I die. After all, currently I'm doing a lot gatekeeping for her. And, when the pressure gets too much for her, she tends to react emotionally and give up...

*** Headache ahh ... **"


No Signature...

Is your wife a Singapore PR?
If you happened to pass away, can your wife continue to stay in Singapore until she pass away?

 

[reddevil0728]

I think that's an important detail to check.

If you want to combine charitable giving with financial support for a surviving loved one then something called a charitable remainder trust is an option. In this arrangement the charity sets up the trust and pays a stipulated variable, fixed, or escalating lifetime income stream to a beneficiary. (Preferably escalating, I suggest.) Upon the beneficiary's demise the charity receives its share, and the arrangement ends. Universities with large endowments frequently offer CRTs, for example.

There are some advantages with this approach. One obvious advantage is that you help a charity you care about. Also, many charities (especially large charities) can set up these trust arrangements at much lower cost than otherwise. And many charities are extremely reliable trustees; several universities are literally centuries old. Moreover, you often have greater flexibility in terms of the payout currency if that's useful. The charity will of course recognize you publicly if you wish. If for example you want a university lecture hall named after your beneficiary, it's only a question of whether the CRT is big enough. Sometimes there are tax advantages, although that's probably less important in Singapore. And because you've committed to a charitable donation it's not something a beneficiary can undo; CRTs are ordinarily irrevocable. The charity has an obvious interest in preserving its contractual rights to its share.

CRTs fit within the broader category of "planned giving," so you may see that term on charities' Web sites. "Contact our planned giving office," for example.

I should also mention that the government provides a service called the Special Needs Trust Company (SNTC). The SNTC's trust services are available to Singaporean citizens and Singapore Permanent Residents with special needs. This is a subsidized trust service to look after special needs individuals after their caregiving loved ones pass on. "Special needs" is defined fairly broadly. The minimum initial funding requirement for an SNTC Trust is only S$5,000.

is the chunk of words u add to the one-liner in reply to my post related to my post?

Is your wife a Singapore PR?
If you happened to pass away, can your wife continue to stay in Singapore until she pass away?

Will still be a PR ma.

 

[CrashWire]

I should also mention that the government provides a service called the Special Needs Trust Company (SNTC). The SNTC's trust services are available to Singaporean citizens and Singapore Permanent Residents with special needs. This is a subsidized trust service to look after special needs individuals after their caregiving loved ones pass on. "Special needs" is defined fairly broadly. The minimum initial funding requirement for an SNTC Trust is only S$5,000.

It's not really broad:

https://www.sntc.org.sg/services/trust-services

Fulfils SNTC’s definition of a person with special needs: those whose prospects of engaging in education / training / employment / recreation are substantially reduced due to physical / sensory / intellectual / developmental impairment (including mental disabilities)

 

[BBCWatcher]

Will still be a PR ma.

A dead person cannot force someone to maintain a particular immigration status or citizenship. Not even a living person can do that, not really. And governments control these statuses anyway. Thus a financial security arrangement that’s contingent on a particular immigration status — CPF LIFE, as a notable example (unfortunately) — is more likely to fail. Which is why I mentioned this important point.

 

[BBCWatcher]

is the chunk of words u add to the one-liner in reply to my post related to my post?

Yes. You raised a concern about whether a non-trust life annuity is effectively revocable — a concern I already mentioned. (Maybe, it depends, important to check.) I pointed out that CRTs and SNTC Trusts are irrevocable trusts. However, SNTC Trusts might (in weird edge cases anyway) be vulnerable to immigration status complications (also important to check).

 

[reddevil0728]

A dead person cannot force someone to maintain a particular immigration status or citizenship. Not even a living person can do that, not really. And governments control these statuses anyway. Thus a financial security arrangement that’s contingent on a particular immigration status — CPF LIFE, as a notable example (unfortunately) — is more likely to fail. Which is why I mentioned this important point.

Eh the question is can she not must she will she

 

[reddevil0728]

Yes. You raised a concern about whether a non-trust life annuity is effectively revocable — a concern I already mentioned. (Maybe, it depends, important to check.) I pointed out that CRTs and SNTC Trusts are irrevocable trusts. However, SNTC Trusts might (in weird edge cases anyway) be vulnerable to immigration status complications (also important to check).

Right. So this is the tldr?

 

[meekiatah]

Thanks BBCWATCHER for the time taken to write the lengthy post with great advice. I'll need some time to digest the info...

Think a couple of important info I left out in the initial post.

She currently holes a 5 years LTVP Plus. Applying for SPR is in the pipeline, buti can't assume she will be given PR in future. She's not someone with special needs, though I don't think inability to handle large sum of money qualifies as special needs.

She like staying in Singapore, and does not rule out staying in Singapore for the long term future. Especially so after the numerous corruption cases uncover by Pak Probowo after he take over the Presidency from Pak Jokowi. Imagine the national Petrol company supplying Ron88 petrol for those who paid for Rom92 and above. And illegally controlling the supply of home use LPG gas...

 

[CrashWire]

A dead person cannot force someone to maintain a particular immigration status or citizenship. Not even a living person can do that, not really. And governments control these statuses anyway. Thus a financial security arrangement that’s contingent on a particular immigration status — CPF LIFE, as a notable example (unfortunately) — is more likely to fail. Which is why I mentioned this important point.

I think most governments guarantee (on political faith) that their permanent residence is durable, unless the person commits a serious crime or something?

 

[BBCWatcher]

Eh the question is can she not must she will she

Is it? The original poster expressed concern that a surviving spouse would "fall through the cracks." Why would we assume that concern is limited in certain ways? Why not consider all possible contingencies? Maybe it's not possible to mitigate all risks, but I don't think it makes sense to start by ignoring them.

Thanks BBCWATCHER for the time taken to write the lengthy post with great advice. I'll need some time to digest the info...

No problem!

Think a couple of important info I left out in the initial post.
She currently holes a 5 years LTVP Plus. Applying for SPR is in the pipeline, buti can't assume she will be given PR in future. She's not someone with special needs, though I don't think inability to handle large sum of money qualifies as special needs.

Happily not.

I didn't assume any particular immigration status, or its durability, which is why I couched my comments.

She like staying in Singapore, and does not rule out staying in Singapore for the long term future. Especially so after the numerous corruption cases uncover by Pak Probowo after he take over the Presidency from Pak Jokowi. Imagine the national Petrol company supplying Ron88 petrol for those who paid for Rom92 and above. And illegally controlling the supply of home use LPG gas...

Right, but obviously if you were to die tomorrow she'll probably relocate. She probably won't have any choice. So it's reasonable for your/her financial defense plan to continue working well whether she resides in Singapore or elsewhere. Hence CPF LIFE (for example) is not a viable option.

I think most governments guarantee (on political faith) that their permanent residence is durable, unless the person commits a serious crime or something?

In this case we're also talking about what the beneficiary might voluntarily do. The Government of Singapore will not stop a (possibly future in this case) Singapore Permanent Resident from terminating or abandoning her SPR status, at least not as long as the SPR is legally competent to do so. Hence CPF LIFE is not a viable option for these purposes.

 

[Prof. Utonium]

Charity trust funds.

That was recommended to me by someone who owes multiple businesses. He knows his kids won't know how to manage the assets, hence the move.

 

[powerpuff2007]

My friend's spouse was extremely frugal but once my friend passed away, the spouse somehow got remarried within the year, much to everyone's surprise as the spouse was much devoted to late friend. The inheritance then became part of the newly married's life.

 

[thinline]

Can CPF nomination put in charity name ? And how to do that. I only know put person name and IC

 

[BBCWatcher]

Can CPF nomination put in charity name ? And how to do that. I only know put person name and IC

Generally yes. If you're having trouble doing so online you can make an appointment with the CPF Board to make a nomination at their service centre.

 

[jasvonvios]

Put all your money in CPF, you can decide the amount to give her on a monthly basis thru CPF.