Firstly what is estate planning all about?


Estate planning is the process of anticipating and arranging for the disposal of an estate during your life. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate

The following 4 steps will help you to ensure that your estate planning is on track

1. No matter your net worth, it’s important to have at least a basic estate plan in place.

– Such a plan ensures that your family and financial goals are met after you die.

2. Take inventory of your assets.
– Whom do you want to inherit your assets. Whom do you want to handle your financial affairs if you are incapacitated.

3. Everybody needs a will.
– Discussing your estate plans with your heirs may prevent disputes or confusion.

4. Insurance as an Estate Planning tool
– Insurance allows you to use your cash/other assets today & yet leave the amount that you want for your heirs.

How does insurance as an Estate Planning tool work?

For example, Mr & Mrs Lim have each 100k in cash assets (total 200k cash/liquid assets).

They would like to leave at least 50k each to their 2 children (total 100k inheritence).

Using life insurance as a tool, they can spend up to the 200k they have & yet leave 100k to their children as inheritance.

Below are the costs monthly based on the minimum amount (coverage amt) that they want to leave for their children.

Coverage Costs for Mr & Mrs Lim

Coverage Costs for Mr & Mrs Lim

Note: It is slightly cheaper for females (e.g. Mrs Lim) compared to males (e.g. Mr Lim) due to average lifespan factors

Mr & Mrs Lim decide that they can set aside 200 each per mth (total 400) without affecting their lifestyle as they have residual income that will cover the 400 per mth.

Mr & Mrs Lim now have up to 200k that they can spend to travel & give to their favorite charity organisation without worrying that they are depriving their children of their inheritance.

Interested in how to proceed with estate planning, will writing or using insurance as an estate planning tool?