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CPF Nomination and Making a Will

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The recent saga involving the will of the late founding father of Singapore, Lee Kuan Yew, has cast a spotlight on will. Of course, it is ridiculous to question the validity of Mr Lee Kuan Yew’s will as he was a trained lawyer. But most Singaporeans are not lawyers by profession. So, it is important to understand the legal framework to avoid the devastating outcome of making the wrong will. In this article, I will also share what is the outcome if you did not make a CPF nomination.

Basically, a will is a legal document that indicates the instructions on how you wish to distribute your assets after you passed on. Technically, everyone can craft his own will without the aid of legal advisors. Although this is the case, it is not advisable to do so because most of us are not familiar with the laws in Singapore. I have seen so many sad stories of legal disputes involving the challenges on the validity of wills. The biggest tragedies are often the broken ties and damaged family relationships.

CPf nomination

Before proceeding, I need to clarify that I am not a lawyer by training and this article is not meant to be a form of legal advice. I am writing this article to the best of my knowledge. If there are any mistakes on my research, please feel free to point out to me.

Should you make a will?

The question most often asked is whether is there a need to make a will in the first place. If so, what is the correct age to make a will? Under the Wills Act, only those who are 21 years and above can make a will. If you are not married, you are eligible to make a will. But note that the will would be revoked when you get married. Thus, in my own opinion, it is not ideal for those who are not married to draw up a will because the family nucleus will change further down the road.

Most people are not aware that their wills would be revoked by marriage. Henceforth, many years down the road, there are often serious implications. In Singapore, the Intestate Succession law gives top priority to the spouse and children. The second priority are the surviving parents of the deceased.

If you have made a will before you get married and allocated some assets to your parents, the will would be revoked. If you did not make a new will after your marriage, then your assets would be distributed accordingly to the Intestate Succession law when you passed on. So eventually, all your assets would go to your surviving spouse and children. Your aged parents would get nothing.

CPF Nomination

Your CPF savings are not covered under your will. This is because your CPF savings do not form your estate and are protected from creditor claims on any outstanding debts. This arrangement protects your CPF savings and ensures that your nominees receive your CPF savings expeditiously.

Similar to a will, your CPF nomination will also be revoked upon marriage. To this end, you are encouraged to make a new CPF nomination if you want your CPF savings to be distributed according to your wishes.

Because of this, it is important that you make a CPF nomination if you want your CPF savings to be distributed according to your wishes. Otherwise, your CPF savings will be distributed by the Public Trustee’s Office (PTO) in accordance to the intestacy laws (for non-Muslims) of Singapore or the inheritance certificate (for Muslims) to your family members. You may want to note the following fees charged by PTO for the administration of un-nominated CPF monies:

The fees that PTO charge for dealing with CPF money are shown below:

 

Amount of CPF Monies Charge
For the first $1,000 2.400%
For the next $9,000 1.500%
For the next $240,000 0.750%
For the next $250,000 0.450%
For amounts in excess of $500,000 0.300%

These fees, which PTO will take from the CPF money, include GST and cannot be waived. You will have to pay a minimum fee of $15.

Interestingly, divorce does not revoke your CPF nomination. Thus, you should review your CPF nomination from time to time so that it continues to fit your intentions.

Intestate Succession Act

In the event that your will is invalidated by your marriage, you need to be cognizant on the rules of distribution under the Intestate Succession Act. As mentioned above, the top priority of distribution is always the spouse and children, followed by parents, siblings, grandparents, aunts and uncles.

Very often, disputes arose when a couple have no children and when the deceased still have surviving parent(s). In the absence of a valid will, the surviving spouse will be entitled to half of the estate while the parent(s) will get the other half.

However, some people may have strained relationship with their parents and may prefer to let the spouse have the assets after they passed on. This is especially so if the deceased were critically ill before death and the spouse had depleted all the life savings to provide care for the deceased. In such circumstances, a will is useful to ensure that the estate is distributed according to what the deceased had desired.

Property

Previously, I have written several articles on properties made under Joint Tenancy and Tenancy-in-Common. The former refers to the right of survivorship while the latter refers to the definite interest between the tenants in the property. What this means is that you cannot will a property that is made under the Joint Tenancy. The other joint tenants would own the property if you passed on.

If you wanted your will to cover your property, then the manner of holding for your property shall be made under Tenancy-in-Common. Many Singaporeans do not understand the difference between Joint Tenancy and Tenancy-in-Common. Henceforth, this often resulted in complications when one of the owners died.

Conclusion

Before making your own will, it is important to be aware of the CPF and HDB rules. Otherwise, it could result in your estate not being distributed in accordance to your desire. Intestate Succession law may lack flexibility. So sometimes it may be a better option to make a will to ensure that your estate is distributed to your loved ones who deserve your assets. If you are unsure of the various laws that could impact the validity of your will, then it may be wise to engage a professional law firm to assist you in making a will.

But most importantly, please make your CPF nomination if you had not. It is not worthwhile to pay so much fees to the government.

Read my other articles on CPF:

  1. Devastating HDB Loan and CPF Accrued Interest
  2. CPF’s Home Protection Scheme (HPS)
  3. The Dark Side of CPF Housing Withdrawal Limit

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2 Comments

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  1. Will is also not invalidated by divorce … Just to take note.

    Also impt to consider what happens if both parents die, leaving young kids behind. Will with testamentary trust can help… But still need trustworthy parties / relatives to ensure your instructions carried out properly n kids looked after etc…

    Home for staying is best to be joint tenancy unless you don’t trust ur spouse n want to specify who will also co-own.

    Even if joint tenancy, can still specify in will in event both joint owners passed away. E.g. If both die in plane crash, the law takes it as the older die first, followed by the younger. If the wife is younger, she would be the last sole owner before demise. Without specifying in will, the home will be distributed according to intestate. If there are no children, the home will go entirely to wife’s parents or her siblings. The husband’s side will not get the home.

  2. Hi Sinkie,

    Thank you for pointing out that a will is not invalidated by divorce. I didn’t know that.

    On the joint tenancy part, I am not sure whether you are able to will your property in the event both joint owners died. This is because the manner of holding for joint tenancy is actually the right of survivorship. Regardless of whether there is a will, my understanding is that the Intestate Succession law will intervene if the joint tenants all died. This is different from tenancy-in-common.

    Again, I may be wrong because I am not a lawyer by profession. Perhaps a lawyer can advise better on such technicality.

    Regards,
    Gerald
    http://www.sgwealthbuilder.com

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