Wednesday, December 28, 2005

Estate duty puts retirees in a dilemma

Editor
Forum Page
Straits Times

I refer to the letter from Ms Janice Ong entitled "Estate Duty puts retirees in a dilemma" (ST 28 Dec 2005).

Currently, estate duty is payable on liquid assets in excess of $600,000. Ms Ong said that a retiree needs more than $600,000 to maintain a reasonable standard of living.

I wish to give the following suggestions to a retiree with large savings on how to avoid paying estate duty.

1. Invest a significant portion of your lifetime savings in a life annuity. It pays an attractive monthly income which is guaranteed for a lifetime. As the life annuity includes the gradual release of capital during the expected lifetime of the retiree, it will be free of estate duty.

2. Invest in a participating annuity which increases with bonus in most years. The increased payment will help to offset the higher cost of living.

3. Keep up to $600,000 in liquid assets. This gives you the flexibility to meet unexpected cash needs, and is within the exemption limit.

4. Transfer any remaining savings to your children earlier, rather than on your death. If you do not wish to make a lump sum gift, you can buy a term annuity to transfer the money in annual sums over a certain number of years.

You can find more about life annuity from our website, http://www.income.coop/insurance/glannuity

NTUC Income has a market share of about 60 percent of all annuities sold in Singapore. Nearly 30,000 people have bought an annuity from us. Most retirees invest between $50,000 to $100,000. The largest investment in an annuity exceed $1 million.

Tan Kin Lian
Chief Executive Officer

1 comment:

Tan Kin Lian said...

Lump sum payout will be subject to estate duty.

In my case, I refer to an annuity without a capital refund, or when the death occurs after the capital has been fully refunded.

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