Legacy Planning

Legacy planning for the next generation? Are you handing over an asset or liability?

The most common assets that people leave for their children in their legacy planning are Cash, Investments and Properties. In fact, wealthy parents will invest in properties, and leave them for their children as a form of legacy planning. So, what exactly does a property inheritance do that other assets don't?  

Let’s walk through briefly:

• Beneficiaries are unable to sell the property on impulse, as it takes time to process the transaction. This provides a form of security that not many other assets can provide. 

• However, they can cash-out instead of sell, if they really need the money. With private properties, they can use the home equity loan, or cash-out via refinancing instead.

• They can also rent out their property, creating a steady stream of passive income.

• To avoid ABSD, parents can buy their subsequent properties through children’s names as an investment. This is a way of planning for their children’s future and at the same time reaping returns.

In essence, legacy planning involves preserving money for the family. Real estate is a common gift that many aspire to leave behind in their legacy planning due to the high property ownership rate in Singapore. 

Real estate investment is the most important component of most households' wealth portfolio, as it is able to generate on-going income from rental and potential capital appreciation. For many, leaving behind a property will not only preserve wealth, but it will also enhance or grow the wealth that is left behind.

Let's have a look at a case study:

We met both Mr and Mrs Lee at a seminar years ago. We had an interesting discussion on the future of our children. Mr Lee took a very strong interest in wanting to prepare and plan for his 3 children. He approached us on how and what he should do in order to achieve his wish. 

After numerous discussions and planning, Mr & Mrs Lee decided to use his children’s name to purchase and invest in a unit of private property each. They sold their current property, and used the bank leverage gained to invest in these properties with the lowest cash outlay. 

They decided to rent out the units to continue the stream of passive income to repay their loans, allowing them to attain financial security and build a solid foundation for retirement.

Would you like to find out more on Real Estate Legacy Planning? We are Pamela & Shirely from Wonderhomes.sg! Click comment below or drop us a PM & we will get back to you soonest!