Category Archives: Estate Settlement

In order to settle an estate appropriately, we need to understand the legal rights of a shareholder.

Unlike a sole proprietor or partnership, a private limited company is a separate legal entity. Therefore, when a shareholder dies (assuming this shareholder is also the key-person of the company), the company can carry on operating.

A partnership is formed when 2 or more persons come together to set up a business. Upon the death of any one partner, a business partnership will have to shut down. The deceased person’s share in the partnership will then be included as part of his estate for the purpose of estate settlement.

If a sole proprietor business owner dies, the estate settlement process needs to include the settlement of the business.

Like it or not, the debts need to be settled. Even death does not wipe out debts. Settlement of debts has first priority over estate distribution. It is only when all estate debts have been settled, or in rare occasion been forgiven, that the residual estate can be distributed amongst beneficiaries.

Corporate benefits come in all shapes and sizes, and when an employee dies, these benefits could be substantial and usually form part of the deceased person’s estate. Therefore, there is a meaningful need for estate settlement to realise these outstanding benefits.

In Singapore, investment in equities and bonds are held and transacted through Central Depository (Pte) Ltd, commonly known as CDP. Therefore, if the investor passes away, the legal representative needs to settle the estate clearance process with CDP.

Some examples of collective investment schemes (CIS) in Singapore are unit trust and single premium investment linked policies. Usually such products are purchased through 3 types of distribution channels: banks, life insurance companies, and independent financial advisory firms. Each of these channels has its own estate settlement issues.