Adulting 101: My friend asked me to be her CPF nominee. Here's why youths should start thinking about after-death matters

SINGAPORE — I had never thought about how I want my money and savings to be distributed after my death, or what is known as estate planning. That was until my friend asked me to be her Central Provident Fund (CPF) nominee.

As a fresh graduate, I did not think that estate planning was a priority on my list or my friend’s. We are both 23 years old. 

So it was surprising to me that she had started doing this, until she explained her experience with her father’s passing two years ago that taught her the importance of estate planning. 

“Thankfully, my father nominated my mum to receive his CPF funds so it took a very short time, about two weeks, for us to receive his money. If not, we would have to wait longer, probably about a few years,” she said, adding that an acquaintance of hers had to wait two years to receive a loved one’s CPF funds after the latter’s passing.

While I was touched by my friend’s generosity, I was in a dilemma whether to accept or reject her request, since people usually nominate their families.

It is also not an easy topic to discuss, as it involves talking about the death of my dear friend.

I spoke about the matter with some estate planners, who said that estate planning is still taboo for some people, which hinders open conversations about life and death matters.

Thankfully, according to Ms Hui Mei from advanced care and estate planner Affluent Strategies, more young people in their 20s and 30s are becoming prepared to discuss such topics.

“A lot of young people we meet are becoming aware about estate planning-related matters such as Lasting Power of Attorney (LPA), when they start planning for their parents’ retirement or finances in the future.”

“Some of them also become aware when they read about LPA in the news or they come across the digitalisation of LPA on the Singpass app. They usually come with a mentally prepared mindset to talk about death,” said Ms Hui.

Another estate planner, Mr Leonard Chiang from getArrange, said: “It’s still a taboo topic to talk about death in Asia but there’s an increasing acceptance to discuss it. A majority of my clients are in their 50s or late 40s, but there is an increasing take-up rate for those in their late 20s and 30s.

“Many became aware because of the passing of their loved ones, either their relatives or even their parents. Some even encounter a health scare and start to realise the importance of estate planning.”

WHY START EARLY?

Estate planning is relevant to anyone who has already begun earning an income, said Mr Elmi Hairi, financial services manager from Ethiqal Wealth Advisory.

The idea that estate planning is only for those who are older or more advanced in their career stems from a misunderstanding of what estate planning entails.

Ms Hui said that many people think that estate planning applies for deaths only, but it also covers mental incapacity, which can occur due to accidents or illnesses.

For instance, the LPA allows a person to nominate someone who can make decisions and act on their behalf on their personal welfare, property and financial matters, if they become mentally incapable.

Estate planning also includes insurance and CPF nomination, of which the latter is immediately applicable to anyone who is working full time in Singapore.

Without proper estate planning, a person’s estate may not be distributed according to how they wanted it, or the transfer of the assets may be delayed.

For instance, if someone dies without choosing a CPF nominee, their loved ones may experience delays, even up to several years, in receiving the deceased’s CPF funds.

“Family members even have to spend thousands of dollars to engage with a lawyer to go through the administrative processes, which is also time-consuming,” said Mr Elmi.

Another possible consequence of not doing estate planning is causing disputes among family members as to how assets should be distributed.

Doing estate planning as early as possible ensures that in any event, whether death or accident, our loved ones will have a peace of mind when it comes to the distribution of our assets.

WHERE TO START?

As a start, one should list their available assets that can be passed on, including CPF funds, property and investment assets.

Then, one should determine the recipients or nominees for these assets before putting it in writing such as doing up an LPA or writing a will in the presence of two witnesses who are above 21 years old.

However, it is advisable to ask for legal advice when writing a will to ensure that a person’s assets will be distributed according to his or her wishes.

“Someone asked me for advice about their deceased one’s will that was legally invalid, but there was nothing we could do about it since the will was not legally binding in the first place,” said Mr Elmi.

One can do this on their own and refer to online guidelines from CPF or MoneySense, a Singapore national financial education programme.

According to the MoneySense website, the Office of the Public Guardian waived the application fees for Singaporeans making an LPA Form 1 until March 31.

The LPA Form 1 is a standard, widely used version of LPA that allows donors to grant general powers with basic restrictions to donees, or those entrusted to make decisions on behalf of the donors. 

However, according to Ms Hui and Mr Chiang, the option of doing estate planning on your own may be costly, with lawyers typically charging from S$200 to over S$1,000 for wills and LPA certificates, depending on its complexity, and doctors charging from S$100 to about S$600 to issue an LPA certificate.

A more affordable and time-saving option is to engage with estate planners who can provide a comprehensive estate planning service, such as listing assets, planning distribution and updating estate planning every few months, from S$100. 

WHO DO I WILL OR NOMINATE?

While the norm is to list family members as recipients of assets or nominees, one can also nominate or will to friends.

However, wills for Muslims may differ, Mr Elmi said, as Muslims in Singapore are subject to the Administration of Muslim Law Act (AMLA).

“Under AMLA, a Muslim’s assets will be distributed to stipulated beneficiaries as stated in Syariah law,” said Mr Elmi.

Going back to my friend’s request to be her CPF nominee, I'm in a dilemma whether to accept or reject her generosity. Don’t people normally nominate their family members?

Legally, a person can nominate anyone to become their CPF nominee, including non-family members. 

A person can also change their nominees at any time, and there are no limits to the number of nominees.

When I asked whether my friend should inform her family members to prevent disputes, Mr Elmi said: “Even if they (family members) believe that the CPF funds should be distributed to family members or specific beneficiaries, they can't challenge it."

CPF nominations are generally non-contestable, except in specific circumstances, such as in court.

“I’ve had clients who argue they should have received the CPF funds whether due to personal ties with the deceased or Syariah law, but it’s still no use as legally, they cannot contest a CPF nomination. The CPF nomination will also not be a part of the deceased’s estate.”

ABOUT THE WRITER:

Nur Hikmah Md Ali, 23, is a journalist at TODAY.

 

CORRECTION: An earlier version of the article said only those above 18 years old can be a CPF nominee and that CPF nominations are non-contestable. These are incorrect. Nominees can be under 18 years old, and nominations can be contested under specific instances, such as in court. We are sorry for the errors.