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Understanding Medisave for Malaysians in Singapore: What Happens After Death?

What is the use of Medisave after death? Reading it with a case study of Malaysians becoming Singapore Permanent Residents and passing away at age 50 in Singapore.

 

Background

John and Emily Lim, a Malaysian married couple, moved to Singapore in their early 30s. John became a Senior Engineer in the semiconductor industry, while Emily worked as a Chartered Accountant in a multinational company. They decided to settle in Singapore and became Permanent Residents (PRs). They have two children, aged 12 and 10, who are studying in local schools.

 

Financial Planning and CPF Contributions

As PRs, John and Emily contributed to the Central Provident Fund (CPF), including their Ordinary Account (OA), Special Account (SA), and MediSave Account (MA). They were diligent in their financial planning, ensuring they made regular contributions to their MediSave accounts to cover healthcare costs and save for their future.

 

Tragic Event

Unfortunately, John passed away suddenly at the age of 50 due to a heart attack. His untimely death left Emily and their two children in a state of shock and grief. They took a one-week break back to their hometown in Malaysia for funeral and grief process.

 

Handling of John’s MediSave Account

Upon John’s death, the balance in his MediSave account, along with his other CPF savings, needed to be managed and distributed according to CPF rules.

  1. CPF Nomination: Thankfully, John had made a CPF nomination. He nominated Emily and their two children as beneficiaries, with Emily receiving 50% of the funds and each child receiving 25%.
  2. Outstanding Medical Bills: Before the distribution of the CPF savings, any outstanding medical bills incurred before John’s death were settled using the balance in his MediSave account. This ensured that all medical expenses were paid off.
  3. Transfer to Nominees: After settling the medical bills, the remaining balance in John’s MediSave account, along with his OA and SA, were distributed to Emily and the children according to his CPF nomination. Emily received her share directly into her bank account, and the children’s shares were held in trust until they reached 21 years old.

 

Legal and Tax Considerations

  • No Estate Duty: As CPF savings, including MediSave, are not subject to estate duty in Singapore, Emily and the children did not have to pay taxes on the inherited CPF savings.
  • Intestate Succession Act: Since John had made a CPF nomination, his savings were distributed according to his wishes, avoiding the complexities of the Intestate Succession Act.

 

Conclusion

This case highlights the importance of CPF nominations for PRs and citizens in Singapore. By making a CPF nomination, John ensured that his CPF savings, including MediSave, were distributed according to his wishes, providing financial security for Emily and their children. This case also underscores the need for effective financial planning, especially for expatriates and PRs living in Singapore, to manage their CPF contributions and ensure their families are protected in the event of an untimely death.

 

If you are a Singaporean / PR in Singapore, consider making a CPF nomination but do not know how, I can help you complete the setting.

If you consider engaging in comprehensive financial planning to secure your family’s future, I can give you personalized financial advice and planning.

Contact me today for your enquiries! 

Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.

Published By:

Lidwina Teo 维娜

With over 5 years of experience in client service industries, I come to understand and appreciate the importance of high-quality customer service and customer experience. The key is to always prioritize the best interests of customers, ensuring their needs and expectations are met with professionalism.

The passion for client service extends into my current role where I strive to deliver personalized financial planning services. With more than 150 business partners in our company, I can help you achieve your financial goals by analyzing various financial products and offering tailored financial advice. 

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In compliance with the Personal Data Protection Act, Financial Alliance Pte Ltd (“FAPL”) seek your consent to collect and use your personal data (e.g. name, NRIC, contact numbers, mailing addresses, email addresses and photograph) for the purposes of and in accordance with FAPL’s Data Protection Policy, which can be found on FAPL’s website at https://fa.com.sg/data-protection-policy/.

根据《个人数据保护法》，鑫盟理财私人有限公司征求您的同意向您收集并使用您的个人信息。鑫盟理财将根据公司的个人数据保护政策所阐述的用途使用您的个人资料（例如姓名，证件号码，联系电话，邮寄地址，电邮地址和照片）。 该政策可在本公司网站上查寻，网址为 https://fa.com.sg/data-protection-policy/.

By submitting this form, you are deemed to have read and understood FAPL’s Personal Data Policy.

提交此表格，即表示您已阅读并理解鑫盟理财私人有限公司的个人数据政策