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A family member has passed on. What happens to the inheritance property now?


legal document signing for property inheritance

As a key milestone in life, death is something natural that none of us can escape from.

Yet the loss of a loved one still brings about an emotional period for the entire family. That empty space from where they once stood, the laughters (or shoutings) that once echoed through the room, or just the smallest acts of gentle kindness. Things that you previously never paid this much attention to.


With Singapore's high property ownership, there's also a good chance that the passing leaves behind a property under their name. If you're reading this, you might have recently experienced the passing of your family member, or perhaps you're wondering what you can do to prepare for it. As it is a situation not often encountered, it is common that the death also leaves the family with many questions about the inheritance property.

What happens to the property upon death? Who inherits it? Do I have to pay taxes on it?


It's never a straightforward case dealing with an inheritance property - especially as it comes after such an emotional event. To help make things easier for you, we, along with some partners in the field, are here to share more about what comes next.


First things first...

In Singapore, there are three key questions to ask which will affect what happens to the property after someone passes away. 1. Was there a valid will written?

2. Was the deceased a Muslim?

3. Is the inherited property an HDB or a private property?


 

1. Was there a valid will written?


A will is essentially a legal document that states how your estate (assets) will be distributed upon death.


When someone passes on without a valid will, they are classified to have died 'intestate'. Assets will then be distributed to the beneficiaries (likely immediate family) according to Singapore's intestate law. There are two parts of intestate law in Singapore - which will be covered later in the article.


When there is a valid will, a person will be named as an executor - who will be required to apply for a Grant of Probate before distributing the assets based on the will. According to Ms. Fiedya Tio, a conveyancing lawyer from BR Law, it could take about 2 - 5 months before the Grant of Probate is issued.

What happens if you die without a will?

Without a valid will, one of the beneficiaries will have to apply to be the administrator and get a Grant of Letters of Administration in order to distribute the estate to the beneficiaries. Ms. Tio advises that this could take a longer time, about 2 - 7 months.

Both applications for a Grant of Probate or Grant of Letters of Administration can be done with or without a lawyer. However, engaging a probate lawyer can certainly ease the stressors of handling the process yourself. You may begin engaging a probate lawyer anytime after the passing - a good time could be after the funeral.


Ms. Yeo Puay Tse, a Sr. Financial Consultant trained in estate planning recommends having a will to avoid further delay and costs in the distribution of the estate. According to Ms. Yeo, having a valid will also mitigate the risk of contesting the distribution of assets.


2. Was the deceased a Muslim?


In Singapore, all Muslims follow the Islamic law on inheritance (Faraid), enforced by the Syariah Court in Singapore. Faraid law guides Muslims in how their assets can be distributed in their will, and also how the assets are distributed when a person dies intestate without a valid will. For example, the will must not omit lawful Faraidh beneficiaries, and only a maximum of one-third of their assets can be willed away to non-faraidh beneficiaries.

If a Muslim dies intestate, an Inheritance Certificate detailing the beneficiaries of the estate is first needed. According to the Islamic law, the estate will first be distributed to the primary Quranic heirs, with any residue distributed to the Agnatic Heirs. For further details on the type of beneficiaries within Faraid law, refer to MUIS document, or Syriah Court of Singapore's Online Trial Inheritance Calculator.

Conversely, non-Muslims in Singapore who dies intestate will have their estate distributed according to the Intestate Succession Act. There are different rules that stipulate the scenarios on how the assets are distributed, based on the surviving beneficiaries. As a rule of thumb, the spouse, children, and parents will have the greatest priority. For more details on the priority of distribution, check out the rules on this MoneySense page.


3. Is the inherited property an HDB or a private property?


If the inherited property is an HDB, more restrictions might apply on what will happen to the property upon death.

Before that, if the property was held under joint tenancy with other owners, the remaining interest automatically gets transferred to the remaining owners. The majority of HDBs are held under joint tenancy as it is typically the default option. If the inherited property was held under tenancy-in-common with multiple owners, or if the deceased was the sole owner, the remaining interest will be distributed according to the will or intestate laws.

 

Inheritance flat is an HDB

If the inheritance flat is an HDB only those who meet the HDB eligibility criteria can continue to hold the inherited flat. This means being a Singapore Citizen or PR, being at least 21 years old, and meeting the HDB eligibility schemes and rules.

You can only hold the HDB flat if you don't already own an HDB, as you can only hold one HDB flat at a time. If you're inheriting an HDB flat while already owning your own, you have the choice to keep one of the flats and sell the other - so long as your current flat has met the Minimum Occupation Period (MOP).

What if you already own a private property?


Good news - if the inheritance flat was a non-subsidized HDB bought before 30 August 2010, you may keep both the HDB and your current property (once again if you meet the HDB eligibility schemes and rules). The only downside is that you and your family have to live in the HDB if you chose to retain it.

If the inheritance HDB flat has yet to attain its MOP status, an additional step might be required. Reach out to HDB via their e-feedback form and they will assign a case officer to help update the system to allow for the sale. If you require support on this, do contact us to clarify your doubts.


 

Inheritance flat is a Private Property

What happens if you inherit a house that is a private property?

Good news too - as there are fewer rules and restrictions to comply with (phew!). This means less circumstances where you're forced to choose between selling or keeping your existing home.

You'll only be required to sell the inherited property if you're a foreigner and the inherited property is a landed home (outside of Sentosa Cove), or if you're a PR currently holding a HDB. Singapore Citizens currently owning an HDB that has yet to hit its MOP period would also be required to sell the inherited private property.



 


What are the other fees, taxes, and costs involved?

A common question we're asked is - do I have to pay additional fees or taxes when inheriting a property?


This is especially when beneficiaries have existing properties and they wonder whether they might be taxed stamp duty on the additional inherited property (assuming they can keep it). Safe to say, in cases of direct inheritance, you do not have to pay Buyer's Stamp Duty and Additional Buyer's Stamp Duty.


However, owning an inherited property adds to your existing property count - no matter how big or small the share of the property you're inheriting is. Thus, if you purchase another property later, this will count towards your property count in the payable stamp duty.


According to Ms. Tio, some other fees to consider include:

  • Legal fees to obtain the Grant of Probate or Grant of Letters of Administration

  • Legal fees to advise and act in the administration of the estate

  • Conveyancing fees for transferring of ownership and for the sale (if any)

When should I start selling if I have to?

Your inherited property can be sold as soon as you attain the Grant of Probate or Grant of Letters of Administration (officially issue an Option to Purchase). But it might take some time to understand the selling timeline and develop a marketing plan, so you may consider reaching out to your real estate advisor beforehand.


What happens to the CPF used for housing?

You might have heard that when selling your home, you would be required to return to your account any CPF used including accrued interest. However, in the event of death, the owner's CPF account will actually be closed before the sale of the property - with the balance distributed in accordance with the will or Intestate succession law. The CPF used for the property will not be needed to be re-payed in this instance.


Is there anything else to note?

The process of dealing with an inherited property can be tricky, especially when there are multiple beneficiaries involved. Ms. Yeo shared that aside from deciding whether to sell or keep the inherited property, a key challenge relates to achieving fairness and equity in the property transfer. In instances when a single property is to be split amongst multiple beneficiaries with differing opinions, or when distributing two dissimilar properties, the distribution can be complicated.


Her advice is for families to have an open discussion when it comes to inheritance properties - to talk about their intention, distribution, and wishes on whether to keep or to sell. (Doesn't this remind you of a huge family dispute public saga in Singapore?). It's also important for the family to know about the properties owned as there are cases where the family can be clueless about the assets/estate of the deceased.


This sentiment is also echoed by Ms. Tio, who shared that gathering information about the deceased's assets could be a challenge - especially when overseas assets are involved. Other factors that can complicate the inheritance process include the deceased living overseas and/or passing away overseas. In such instances, foreign law may be involved as well and things can get really complicated!


Final notes


Dealing with an inheritance property is definitely not a simple and easy situation, especially due to how uncommon you might encounter it. Compound that with the emotional factor, and the confusion can be further augmented.

We hope this article serves as a guide for you and your family, through the tough times - even just help better prepare you in the event of inheriting a property.


Still confused about your inheritance property? Reach out to us to get your answers cleared, or to be directed to the relevant subject expert.



 

Special appreciation to our partners for making this article a reality


Ms Fiedya Tio is an Associate at BR Law, with extensive experience in managing private residential conveyancing matters. She currently undertakes and assists on a wide array of real estate transactions under the supervision of an Associate Director.


Ms. Yeo Puay Tse is a Senior Financial Consultant from Planners Inc. representing Great Eastern Financial Advisors. As a certified Associate Wealth Planner, she assists clients looking for retirement and legacy planning, advising them in insurance and estate distribution matters.

 










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