Traditionally, the trust is perceived as the sole province of wealthy people and perceived as costly and complex. This is not always the case as the trust is a good tool for any individual and can be utilised in other situations as illustrated in this article.

EPPL (Estate Planning Practitioners Limited), part of the PreceptsGroup, is making a breakthrough in the estate planning industry, by enabling digital trusts. Its new business unit, EPPL Digital is formed to spearhead digitised estate planning and trust services using state- of-the-art technology. This opens vast opportunities in the largely under-served segment of the market looking at non-complex trust solutions. This platform will enable anyone wanting to create a trust conveniently and at low costs through an entirely digitised process, where he appoints his preferred trustee to perform the role.

The present unprecedented pandemic has significantly impacted many aspects in our lives. With this new platform, financial practitioners can look forward to provide even more estate planning solutions for their existing clients.

The first of these solutions by EPPL Digital will be launched in May 2021, namely the ProviTrust. It is a revocable trust designed for the purpose of receiving one’s Central Provident Fund (CPF) savings upon his demise, for the purpose of planning the distributions to his beneficiaries. It can be a fixed or discretionary trust and the CPF account holder (settlor) can either appoint an individual trustee or a professional trustee to hold the CPF savings for the benefit of the beneficiaries. It is easy and affordable to set up. Via the digital platform, the trust deed and letter of wishes will be stored digitally for easy retrieval.

With a growing emphasis in retirement planning in Singapore, the CPF Board is multiplying its efforts in educating and creating awareness on the importance of CPF accumulations to enhance retirement funds. An individual can accumulate substantial amounts in his CPF account during his working life. While the minimum Basic Retirement Sum stands at $93,000 in 2021, it is likely that many account holders will have accumulated much more savings than that by the time he is 65.

As CPF funds are not covered by a Will, it is crucial for anyone with a CPF account to make his CPF nomination to ensure that his CPF savings will go to the intended nominees. ProviTrust gives all CPF account holders the option of nominating their CPF savings into a Trust, by the appointment of his trustee to hold the CPF funds that is paid out on demise. The trustee is empowered to distribute the moneys periodically, whether monthly, quarterly, half-yearly or yearly as the settlor thinks desirable.

To highlight some of the benefits of ProviTrust:

1. Main and Substitute group of beneficiaries

You may prioritize your beneficiaries in a main group and have an option to add in a substitute group. If the main group of beneficiaries pass on before you, your funds will be distributed to the substitute group. The substitute group can also include a charity for a good cause, if all the main group of beneficiaries do not survive you.

2. Protect against beneficiary’s creditors

ProviTrust can ensure the continual protection of your CPF funds for your loved ones upon your demise. In the unfortunate event where any of your beneficiaries is bankrupt or is faced with potential creditor claims, further distributions to them can be withheld and will not be subject to claims from the Official Assignee when a discretionary trust is set up. The trustee can have the discretion to give an amount periodically, for the living maintenance needs of the bankrupt beneficiary.

3. Protecting minor beneficiaries

For minor beneficiaries, ProviTrust can provide for their basic needs, living maintenance, education, and medical costs. The trustee can hold the funds and distribute them according to your instructions in a manner that is suitable for the circumstances of the young beneficiary. This is better off compared to young beneficiaries receiving significant lump sums which may result in them being distracted in their studies or their potential squandering and misuse of the funds. ProviTrust can be a viable solution, to mitigate this risk by setting a later vesting age to receive the funds.

4. Protecting mentally incapacitated or aged beneficiaries

Leaving lump sums of your accumulated savings to beneficiaries who may be in old age or even mentally incapacitated, will surely be detrimental. Such elderly beneficiaries may lose the capability to manage their own finances and fall prey to scammers who could rip away their retirement funds, including the funds that you give from your CPF savings. With the ProviTrust, you can provide for your elderly beneficiaries’ basic needs, by having a trustee hold the funds for their benefit.

There are many other benefits to set up the ProviTrust. More information can be found at digital.epplasia.com.

NB: EPPL Digital is an introducer of PTL. As a licensed trust company, PTL is licensed to set up trusts for clients introduced to it. This is not a CPF Board initiative.

This article was first published on our newsletter, The Custodian Issue 17 on April, 2021. Click here to access our latest newsletter.