How To Leave Your House In Your Will4 min read
Leaving your house in a will is not as simple as you think.
Eh, I ask you. Have you watched those dramas where the children of a dead parent fight over his assets and house? Well, this drama also happens in real life hor. That is why you need to do up a will that includes how you would like to distribute your house when you go to heaven or hel… never mind.
But be careful! Here are some factors you need to consider before you do a “hand over”.
1. Doing up a will to leave the property directly to them
Using a will is a simple and effective way for a parent to transfer real estate to the children when the parent dies. The will would include a brief description of the property and state who gets what:
- Distribute the house equally among the children (e.g. 50% to each of 2 children)
- Distribute unequally among the children (e.g. 40% to one child and 60% to another)
- You can also will the whole property/properties to go to certain children
- You can also specify that your house be sold and the profits from the sale be distributed equally or unequally among the children
Very important to note – For (1) and (2), the property will not be divided physically among the children. Instead, the children would hold distinct shares in a single property and become co-owners of the property they inherit.
The best way is to discuss with your children how you wish to distribute the property after you’ve passed on. For example, if you leave your house to many children and each child holds an equal share, what would happen if one child wants to sell the house and the rest don’t want?* Headache, I tell you. I let my lawyer friend tell you next time. So we can skip to point number 2.
2. Leaving the Property on Trust
If your child is under 21, he or she does not have the legal capacity to hold property until they turn 21. Under these circumstances, you can set up a trust, until the child reaches 21 (or older, you specify).
What is a trust?
Ok, new word to learn. A trust is a relationship created by one person (the parent, also called the settlor) directing another person (the trustee, can be lawyer) to hold the settlor’s interest in a property for the benefit of the child.
In this arrangement, the parent or owner of the property, holds the legal interest in the property (by holding the legal title) as well as the equitable interest in the property (beneficial ownership).
Under this trust arrangement, the trustee appointed by the parent will own and manage the property on behalf of the child until the child turns 21 or other age specified by the parent in the trust.
What if it’s a HDB property?
Same as leaving a private property. But got one difference – before you can create a trust over an HDB flat, the parent must get a written approval from the HDB. You can also give the trustee instructions to sell the HDB flat and use the money from the sale for your children’s education, medical expenses, etc. But not for gaming hor.
3. Creation of a Life Estate
A life estate is the ownership of property for the duration of a person’s life. This means that the rights of the owner of a life estate, known as a life tenant, will end when he dies. Sad hor? Although the life tenant is not allowed to sell the property or leave it to anyone in a will, the life tenant still got to pay all property taxes and insurance.
If you have only one property like me, you can use it as an estate planning tool. I give you some examples:
A. Making the child the life tenant of the property
A common example of a life estate is when a parent transfers a property to the child for the life of the child, so that the child can live in it after the parent has passed away. At the same time, the parent identifies the next person in line to own the property after the child living in it dies.
B. Making the parent the life tenant of the property
The parent can also choose to transfer the property to the child (while the parent is still alive) and the child could then enter into a life estate agreement to grant the property to his parent. In this case, the parent would be the life tenant and be entitled to live in the property for the rest of his life. The child would have a future interest in the property after his parent dies. This is because upon the passing of the parent, the parent’s interest in the property will revert to the child.
This arrangement would also save the child from applying for a grant of probate in the future.
The grant of probate is needed to effect the transfer of the property to himself. But because the child already holds an interest in the property when the parent dies, the child does not need a grant of probate.
Cheem or not? Don’t worry lah you slowly read.
The Patriach of the Tng family, Uncle Tng is a Grab driver with the gift of the gab. He’s loud, always trying to help and still uses the terms “Internet” and “Chat room”. As he sees himself as an experienced man of the world, he’s often sharing his worldly views, whether you are interested or not.