CPF Nomination made to a bankrupt

Central Provident Fund (CPF) monies bequeathed to a bankrupt by a deceased member stands to be seized by the Official Assignee (OA) and distributed to creditors. Ironically, it takes a couple of miscommunication between two government departments to clarify this.

See HERE (link broken). The details can be found Re Lim Lye Hiang, ex parte the Official Assignee [2010] SGHC 299

It is unfortunate that it may be due to a poor financial planning that results in this situation. LLH was declared bankrupt on 9 January 1998. Her sister (LLK) unfortunately passed away 14 March 2008 while LLH was discharged bankrupt on 13 November 2009. There was a window period of not 1, 2 or 3 but 10 years to have the nomination changed. Why LLK didn't change her nomination? It is likely due to poor financial planning. Of course, how on earth would LLK knew that her CPF Nomination will fail?

It is only through thorough estate planning would such things be uncovered. This consists of a detailed fact find and analysis. Most people think that estate planning is just writing a Will, CPF Nomination and life insurance nominations. I consider these as mere "products" which will fail if there was no prior fact finding and planning. I feel sorry for LLH. When I do a comprehensive financial planning, I’ll ask about my clients' family members such as their jobs and anything out of the ordinary I should know. This is when I will discover unusual cases so that I can highlight to my clients and advice them appropriately.

Sometime, I’ll receive emails from individuals who only want to have their Will written without any form of planning and fact finding. I will reject these cases despite it is such an easy money for me. If can earn $200 for doing nothing, why don’t I just take it afterall it is an “execution-only” service with zero advice? But in my professionalism, I prefer not to earn such money as I don’t consider such service as anything beneficial but only provide a false sense of security to others.

Update 17/11/2011: The Court of Appeal agrees with the ruling that CPF monies vest with the Official Assignee if the nominee is bankrupt. See this link: HERE

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