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Trust CPF Nomination

Digital Trust option for Malaysians with CPF savings in Singapore

Malaysians who leave Singapore for good but choose to keep their CPF savings in the city-state can look beyond CPF nominations to distribute their savings after they are gone, says EPPL’s Ooi Sen Tee.

Despite continuing pandemic-induced travel restrictions, Malaysians can now set up a Trust in Singapore without going through the hassle of cross-border travel. EPPL Digital has enabled the advent of digital Trusts for Malaysians. Those who maintain a CPF account in Singapore can consider setting up a digital Trust for their CPF savings.

Many Malaysians and Singapore permanent residents have built their careers in Singapore over many years. Many have contributed to their CPF accounts for a long time and grown a valuable Singapore dollar-denominated nest egg. When they decide to return to Malaysia for good, they will typically have to make a decision about what to do with their CPF savings.

According to CPF Board rules, when people renounce citizenship or permanent residency in Singapore, they are entitled to withdraw all the money in their CPF accounts. However, the CPF Board implements specific conditions on CPF savings withdrawal for Malaysians leaving Singapore to reside in West Malaysia, East Malaysia, and other countries. (See CPFB | Account closure by Malaysians in West Malaysia for detailed information.)

Keeping CPF funds in Singapore

Now, there are those who may wish to maintain their CPF savings as status quo and may not opt to withdraw their CPF savings after renouncing their citizenship or permanent residence status. This makes financial sense, especially amid the current global economic uncertainties, persistently low-interest rates, and volatility in foreign exchange markets.

The Monetary Authority of Singapore, however, is committed to keeping the Singapore dollar stable, which helps to make CPF savings a safe-haven asset. Another plus for CPF savings is that they can earn account holders higher interest than they would receive from bank deposits, while returns are relatively risk-free. Hence, CPF savings can be considered a growing portfolio with compounding effects, and without taking unnecessary risks.

Rationale for establishing a Trust for CPF savings

When a person is leaving Singapore for good, it is important to plan for eventualities. Part of the person’s estate, namely his CPF savings, will now be in a foreign country. If the person has drawn up a Will, it cannot cover CPF savings as CPF nominations are the only way to ensure that CPF savings are distributed efficiently to intended beneficiaries.

With a Trust, the distribution options are expanded. CPF account holders can put in instructions via a Trust to pay out their CPF savings over a period of time, at a frequency that suits the beneficiaries’ circumstances, or at a later vesting age. This can largely address concerns that arise from potential squandering, poor money management, and other inheritance pitfalls. The trustee, whoever is appointed, can hold the CPF savings in trust or as a means of asset diversification. At any time, the money could be transferred from Singapore to a Malaysian account.

These are some of the benefits of a digital Trust that a Malaysian can set up in Singapore remotely. The two-year pandemic has accelerated many digital initiatives across industries, and digital Trust is just one of these initiatives. With ProviTrust and online nominations, Malaysians who wish to maintain their CPF accounts in Singapore can now better plan the distribution of their CPF savings to their loved ones.

Find out more about digital Trusts at digital@epplasia.com or contact us at info@epplasia.com

EPPL Digital, Authorised Trust in Singapore | Precepts Group

 

 

 

 

 

 

 

The above article first appeared on EPPL’s The Custodian, Issue 21.

#Trust #CPF Nomination

Ooi Sen Tee | Precepts Group

Ooi Sen Tee

AEPP®

Relationship Manager

Precepts Trustee Ltd (PTL)/ Estate Planning Practitioners Limited (EPPL)

Categories
CPF Nomination

What Happens When No CPF Nomination Is Made?

By Mr Lee Chiwi
Excerpt from PreceptsGroup Succession and Trusts in Wealth Management (4th edition) Book

If the CPF account holder dies without making his CPF nomination, his CPF savings will be transferred to the Public Trustee’s Office for distribution to his family members under the Intestate Succession Act or the Inheritance Certificate (for Muslims) regardless of whether he has made a will to govern the distribution of his estate. This can cause unnecessary anguish on family members as illustrated below.

CPF Sum Not Covered by Will

In 2015, three siblings were reported to have decided to give up their claims to the CPF monies left behind by their grandmother, Madam Lau Pei Ling, who had died aged 93. The siblings lacked the documents to prove that they were related to Madam Lau even though the latter had left everything to them in her will. Unfortunately, Madam Lau made no CPF Nomination with the consequence that her CPF savings (estimated around $7,000) will be transferred to the Public Trustee’s Office (PTO) for distribution to his family members under the Intestate Succession Act. The siblings were not the biological grandchildren of Madam Lau but were orphaned as teenagers and grew up close to Madam Lau. After she had a bad fall five or six years ago, they paid her hospital bill as well for a helper to take care of her. And, until her death, the siblings would visit her almost every weekend. To prove their relationship, the sisters tried to submit to the PTO a 1978 grant of probate in which their grandfather left his Toa Payoh flat to Madam Lau after his death, but this was not accepted as valid. They then considered asking their grandmother’s brother, who is in his 90s, to help them claim the CPF money. However, the PTO required his birth certificate, which was also lost in the war. While it was possible to prove their relationships with Madam Lau by making a statutory declaration, the sisters decided that it was not worth their effort.

Knowing More About CPF Nominations

CPF savings cannot be willed away. They also do not form any part of the estate of the deceased CPF account holder. Under section 25 of the Central Provident Fund Act, a CPF nomination provides CPF members with the option to specify who will receive their CPF savings, and how much each nominee should receive, upon their demise. The succession of a deceased CPF account holder’s CPF savings are therefore distributed according to the persons named in his nomination form, which also states the percentage of the CPF savings each nominee should receive. The nominee could be an individual such as a family member or a corporation. Such a nominee could be named as a trustee.

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