3 Common Estate Planning Mistakes in Personal Investment

Photo: Bob Carlson’s Retirement Watch


Estate Planning is a complex topic as it involves many parties, with legal, social, emotional effects. Many people underestimate the importance of estate planning, and treat estate planning as a simple will-writing and nomination making exercise.

Without proper estate planning, your beneficiaries will have to pay for unnecessary taxes, if any, on your assets, or even suffer leakages during the distribution of your estate. Worse still, it can create disputes and pass down unnecessary financial burdens to your beneficiaries.

We are dealing with more complex investment products nowadays. The following are the most common mistakes one may overlook in their estate planning as far as personal investment is concerned.


1. Ignorance of Estate Duty when investing in the overseas stock market.

The United States imposes 40% estate duty for any investment amount > US$60,000. If you have an investment portfolio worth US$200,000, your beneficiaries will have to fork out US$56,000 in cash before they can inherit your investment holdings.


3 Common Estate Planning Mistakes in Personal Investment — Engage

If you have overseas investment properties in Japan or Chile, you might only be able to retrieve half (or less) than its value! Photo: The Edge

Depending on your investment portfolio, there may be certain estate taxes that may or may not apply to you. Do seek proper tax advice from a qualified tax consultant to find out more.


2. Lack of planning when holding multiple investment properties (local and overseas)

There is no estate duty in Singapore at the moment. However, there are additional duties such as ABSD (Additional Buyer Stamp Duty) and SSD (Seller Stamp Duty) under certain conditions. If you have multiple properties in Singapore and have more than 2 beneficiaries, it is highly likely your beneficiaries have to pay for those for the ownership transfers if you do not plan for your wealth distribution properly. BSD + ABSD could be up to 28% and SSD could be up to 12%. Furthermore, your beneficiaries may have to pay IRAS first before the change of ownership. On top of the stamp duties, there are legal fees involved as well. As for the overseas properties, legal fee and possible estate duty imposed. E.g. Estate duty of 40% of assets more than GBP325,000 in the United Kingdom.


3. Beneficiaries are not trained in dealing with complex investments such as crypto-currency, CFD or options.

There are many types of investments the testator can own during his/her lifetime. He may be actively trading the equity market using CFDs (Contract of Difference), writing US stocks options, crypto-currency such as Bitcoin, Ethereum, Electroneum, etc. All these trading or investment activities involve complex operations and beneficiaries may not understand or know-how to carry out instructions in closing out positions and withdraw the money from the trading accounts. Without the proper knowledge, all the money in the trading or investment will either expire or be worthless (options), suffer complex losses or for digital currencies be lost in cyberspace due to the inability to locate addresses and/or convert back to fiat. Personally, despite being an investor in digital currencies, sometimes I still find it difficult to manage all the addresses, wallets, cryptocurrency exchanges etc.


3 Common Estate Planning Mistakes in Personal Investment — Engage

Examples of Digital Currency Keys. For some digital currencies wallets, without the Private Key, all the monies cannot be retrieved. Photo: Coinsource


Unlike traditional asset classes such as shares and bonds, which are held in the bank or with brokers, lawyers may not have the knowledge or expertise to retrieve the monies in those trading accounts. In addition, the hefty professional fees will hinder beneficiaries to take that route to retrieve the monies and may have to write-off the estate.

Estate planning is all about protecting your loved ones and enables you to pass on your hard-earned assets to your loved ones according to your wishes. Life is unpredictable and we never know what will happen tomorrow. Thus, it is important to start planning for your estate before it’s too late while considering the above common mistakes that people usually make.

Speak to an experienced estate planning professional to understand more about the importance of estate planning and to develop your holistic estate plan. “Failing to plan is planning to fail”.


Kenny Loh is a Certified Estate Planning Consultant and also a CERTIFIED FINANCIAL PLANNER (CFPTM). He specialises in Holistic Estate Planning, using a unique “3-in-1 Will, LPA and Standby Trust” solution, to address his client’s social consideration, legal obligation, emotional needs and family’s harmony in his approach. Kenny has Double Master degree in Business Administration and Electrical Engineering, and also an AEPP (Associate Estate Planning Practitioner) jointly awarded by The Society of Will Writers & Estate Planning Practitioners (SWWEPP) of The United Kingdom, in collaboration with Estate Planning Practitioner Limited (EPPL), the accreditation body for Asia.


Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.

Published By:

Loh Kok Keong Kenny

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