Question: 

Hi, my name is Tim. I’m 50 years old and I have a 10-year old son named Jim. As I write, I have a total of RM 750,000 in my EPF account. Here is my question: ‘If I pass on in the future, I would like to provide Jim from my EPF account: 


a. A Maximum of RM 150,000 in tertiary education fees. 

b. A Fixed Monthly Allowance of RM 1,500 beginning from Jim’s 25th birthday. 

c. A Lump-Sum Payment of its Remaining Balance at Jim’s 40th birthday. 


But, I wasn’t able to do so with the EPF nomination form. As such, I like to know if there is a way for me to do the above? 


Answer: 

First, Tim is correct about the EPF Nomination form for it allows all contributors who are non-Muslims to only nominate their primary beneficiaries and allocate to them their EPF money according to their intended proportions. Hence, if Tim passes on after he had named Jim, his son to be his beneficiary and had elected Amanah Raya Bhd (ARB) as the trustee to keep the EPF money on behalf of Jim, what happens is this – 


If Jim is below 18 after Tim’s passing, 


a. The RM 750,000 in EPF money will first be transferred to the ARB. 

b. The ARB will safeguard the RM 750,000 until Jim reaches 18. 

c. Jim shall receive an one-lump sum payment of RM 750,000 from the ARB. 


If Jim is above 18 after Tim’s passing, 

a. Jim shall receive an one-lump sum payment of RM 750,000 from the EPF. 


Out of which, Jim is free to use the money as he is the rightful beneficiary to his father’s EPF money.  Here, the question is, ‘What if Tim wants to ‘have his say’ in how his EPF money should be managed and distributed if he passes on in the future?’ 

In Tim’s case, I believe he may consider setting up himself a trust in his will. The steps that Tim could take is as follow: 

1. Do not nominate Jim as his beneficiary via the EPF nomination form. 

2. Set up a trust in his will where his trust deed will include instructions such as:


Hence, if Tim passes on, his EPF money, let’s say it had grown to RM 1 million at the point of his death, will then be frozen as it will form part of Tim’s estates. To unlock the estate, the steps to be taken is illustrated as follow: 

1. Tim’s executor shall apply for the Grant of Probate (GP) from the High Court. 

2. Upon which, Tim’s executor shall collect the RM 1 million from the EPF. 

3. Then, it will be transferred into a trust to be managed by its trustee. 

4. The trustee will govern the money based on the trust deed. 

5. The trust shall cease to exist once the money is fully distributed to Jim. 


So now, you may be asking: 

‘How much does it cost to write a will and set up a trust to do the above?’ 

‘Is it expensive?’ 

‘How much does a trustee charge to manage the RM 1 million in EPF money?’ 


Well, here is the answer for Tim: 

First, to write a will and establish a trust with a trust deed, it will cost just under RM 2,500, depending on your choice of trustee company. Of course, the cost of writing a will and forming a trust will vary from a person to another person as it depends on the person’s family size and the extensiveness of his will and trust. 

Second, Tim will not need to pay for any other fee if he chooses to keep his will. 

But, he will incur a small annual fee if he wishes to appoint his trustee company as the custodian to his will and trust documents. 

Third, if Tim passes on, the trustee company will charge a total of 0.8% per year in annual management fee to manage the RM 1 million in EPF money. Based on Tim’s preferred trustee company, the trustee may park the RM 1 million into FD or wealth preservation funds that would yield interest. 

Hence, the trust can pay for its annual management fee with its interest earned from FD or wealth preservation funds. The balance of its interest earned can be added into his trust and thus, enhancing the dollar amount of Tim’s EPF money. As a result, it is not surprising that Jim could still receive a sizable amount of his father’s EPF money when he reaches the age of 40. 

In essence, Tim can assert a higher level of control as to how his EPF money will be managed or distributed if he passes on in the future by just writing himself a will and setting up a trust. 

So now, the question is this: ‘Who shall decide the fate of your EPF money after you have passed on in the future?’ 

Is it your spouse or your children? 

Or, would you like to determine the fate of your EPF money by yourself?

If you wish to do so, you may book yourself a 30-minute consultation session to discuss how you could use a combination of a will and a trust to manage and to distribute your EPF money according to your wishes. 

Please fill up the details below: 


Jocelline Chee
Jocelline Chee

As a Full-time Senior Professional Estate Planner, Jocelline seeks to understand every client’s unique asset holdings and legacy wishes, before recommending a suitable Will and/or Trust structure to meet their needs. She is well-equipped to point out various blindspots in Legacy Planning, that her clients may have. With Jocelline, you can be assured that your legacy planning journey will feel more like having an open-hearted coffee session with a trusted friend, as compared to a formal and awkward session with an equipped advisor.

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