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Thoughts from Lee Chiwi, CEO of PreceptsGroup International

In the Straits Times on 27 Mar 2020, one of the articles of a columnist’s headline read “No more denying the importance of having deep reserves”.

As I reflected upon the article, it connected with what we at PreceptsGroup do for our clients.

At the National level, the government unveiled the unprecedented $60.1 billion COVID-related measures ($55 billion under Unity and Resilience Budgets and additional $5.1 billion Solidarity Budget) to help everyone here in Singapore, practically anyone who has a stake here. The ability of the Singapore government to do this and probably reasonably unique compared to other countries had to do with the building and setting aside of past reserves over the years through prudent spending. The tapping on the reserves was in anticipation that someday, Singapore might need it in a crisis such as the present pandemic. This unlocking of the reserves requires the sanction of the President, so there are checks and controls. In Singapore, we are fortunate to have our reserves held in a “mega trust fund” which operates at the national level when difficulties arise.

What we are experiencing now nationally, has its parallel with the trust structure that we set up for families. This is the part that many clients do to create reserves at the family unit level.

Over the life of the trust, the surplus of the family’s wealth is set aside and the initial trust fund is built up. Income of the trust fund is accumulated and this is added to the family fund as a reserve and resource for the rainy day. When the rainy day comes along which impact the lives of the family members, that is the time when the reserves are needed. The unlocking comes with the trustee and the protector giving consent to the draw down of the funds to assist the family member in many scenarios of adversity- loss of job, inability to work, medical illness and emergencies, creditor attack, loss of mental capacity etc.

Today the pandemic is very much on our minds and with government intervention, we are all fortunate and many of us will ride through the crisis. But what future crisis lurks round the corner? How should we brace ourselves and our family members for such future uncertainties? A takeaway for families is that we should all do our part to create that family reserve for the future rainy day. Set up your family trust if you have not done so! At PreceptsGroup, “Leaving precepts for families” is what we do to help clients with their legacy plans.

In the meantime, stay healthy!”

This article was first published in our newsletter, The Custodian Issue 14 on Sep, 2020. Click here to access our latest newsletter. 

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