SGHOUSING.COM 新加坡房地产网

Q I AM an undischarged bankrupt and will turn 55 within six months.

I am living in a five-room HDB flat that is fully paid up with my CPF savings.

I have no other property.

After setting aside the three required sums (such as the Minimum Sum), I will have about $200,000 to withdraw from my CPF account.

What am I not permitted to do with the money? What investments can I go into?

Can I still have a bank account to keep some of this money?

Can I give the money to a family member to buy a property?

Can I still invest in unit trusts, annuities or shares?

I have a friend who is also an undischarged bankrupt. As a Singapore Permanent Resident, can he denounce his status and withdraw his CPF savings?

A As an undischarged bankrupt, you are allowed to operate one POSB account only.

You are advised to keep records of savings that you withdraw from your CPF account and deposit into your POSB account.

CPF money is protected from creditors but it is still good practice to keep records of it as it will be mixed with your existing account balance and future deposits from sources such as your income.

Basically, you can do what you like with your withdrawn CPF savings, except that you still cannot own any assets as a bankrupt or invest the money.

Yes, you can give the money to a family member - or anyone for that matter - to buy a property and the property can be held in the family member’s name.

The risk is that if your family member decides to keep it for himself, you will face a tough battle to prove your ownership.

Your asking someone else to own a property on your behalf can be deemed illegal and against public policy.

The only asset you can own directly is an HDB flat of five rooms (which you already own) or smaller. For larger HDB flats, you have to seek the approval of the Official Assignee.

You also cannot own a business.

As for the question regarding your friend, the CPF Board does not allow bankrupts who are Singapore PRs to withdraw their CPF before the age of 55, even if your friend denounces his PR status.

And he needs the permission of the Official Assignee to travel out of Singapore.

Matters pertaining to CPF withdrawals are handled by the CPF Board, and not by the Official Assignee.

That applies to Singapore citizens as well.

Singapore citizens who are not undischarged bankrupts and who give up their citizenship are allowed to withdraw their CPF before the age of 55 only when they have obtained citizenship from another country.

Leong Sze Hian President Society of Financial Service Professionals

Advice provided in this column is not meant as a substitute for comprehensive professional advice.

Source : Sunday Times - 12 Nov 2006

Q I UNDERSTAND that only two types of nominations for beneficiaries are valid for life insurance policies.

The first type: Nominations made for NTUC Income policies as they are governed by the Cooperative Societies Act, which allows its policyholders to nominate beneficiaries.

The second type: Nominations made in favour of an insured’s spouse and/or children.

Under Section 73 of the Conveyancing and Law of Property Act, when a person purchases a life insurance policy and nominates the spouse or children as the beneficiaries of the policy, a trust is automatically created in their favour.

I have 10 life insurance policies bought mainly in the 1990s. None were from NTUC Income.

I have named several members of my family as beneficiaries of some of the policies.

Take for example a policy for which my parents, wife and sister are the nominated beneficiaries.

Must all the nominees be wife and/or children before a Section 73 trust is created?

If the nominees are my parents, sister and wife, does it mean:

All the nominations are 100 per cent invalid; or

A Section 73 trust is created for my wife and only a portion of the insurance proceeds will go to her; or

A Section 73 trust is created for my wife for 100 per cent of the proceeds?

What if my father has died? Does it just mean his share will go to the remaining nominees?

If I prepare a will now, can I override all the nominations I have made for the insurance policies?

A In order for a policy to be deemed a trust policy under Section 73 of the Conveyancing and Law of Property Act, all the beneficiaries must be a spouse and/or children.

Any payout from these policies are for the benefit of the beneficiaries.

Thus, even if the insured were to suffer from total and permanent disability, the insurance payout is legally for the benefit of the beneficiaries, not the insured.

Similarly, if the insured were to surrender the policy, the payout will be in his name - unless he has appointed a trustee - but legally it is for the benefit of the beneficiaries.

If the beneficiaries of some of your policies are your parents, sister and wife, your nominations are valid.

However, the policies would not come under Section 73.

If your father has died, his share of your policy proceeds will go to his estate.

If you write a will to override all your policy beneficiary arrangements, it will not apply to NTUC Income policies where a nomination has been made, or to policies deemed to be Section 73 policies.

To avoid complications, and to expedite the payment of claim proceeds, you should speak to your insurer and, wherever possible, make the necessary changes to all your policies to reflect your wishes.

Leong Sze Hian

President

Society of Financial Service Professionals

Advice provided in this column is not meant as a substitute for comprehensivevprofessional advice.

Source : Sunday Times - 5 Nov 2006

Q MY HUSBAND has been declared a bankrupt since 2002 because of credit card debts.

This happened after he was out of a job for six months and the bills piled up.

We also have a renovation loan of about $45,000.

As his wife and guarantor for the loan, I was harassed by creditors and was eventually made a bankrupt too in 2003.

We are not on speaking terms anymore. If I divorce him, will I be discharged from bankruptcy?

After our divorce, can he be liable to provide maintenance for our children who are below 12 years old?

His total debt is close to $200,000.

His monthly instalments to the Official Assignee were $500 (first year), $550 (second year) and $600 (third year).

The instalments are currently $700 per month.

A I note that you were made a bankrupt because you had stood as a guarantor for your husband’s renovation loan.

The lender had a perfectly legitimate legal basis to look to you for your husband’s outstanding loan.

When you became a guarantor for him (the principal debtor), you entered into a separate contract with the lender.

Your obligation to pay under this contract of guarantee was quite distinct from the principal debtor’s obligation.

It is worth repeating that many people assume the obligations of a guarantor without fully realising or appreciating what a burdensome contract they are entering into.

It is often said that a guarantor has everything to lose and nothing to gain.

You will not be discharged from bankruptcy by divorcing your husband.

A discharge from bankruptcy may be done in two ways, either by an application to court or by a certificate from the Official Assignee (OA).

You, the OA or any person with an interest may make an application to court.

The court may grant either an absolute discharge or a conditional discharge.

If you are granted an absolute discharge, you would be free from any further obligations.

But under a conditional discharge, the court may attach conditions such as requiring you to pay dividends of at least 25 per cent as well as make contributions from your post-discharge income.

The court will take into account such factors as your age, the cause of the bankruptcy and your blameworthiness in incurring the debts, the number of creditors and the value of your assets against your liabilities.

For a discharge by certificate from the OA, the OA generally reviews all cases where there is a bankruptcy of at least three years and the debts are less than $500,000.

The OA also takes into account similar factors as a court also looks at the bankrupt’s conduct and level of cooperation.

In both situations, the creditors have to be notified and they are entitled to object.

If the OA rejects the objections, the creditors can then go to court for an order prohibiting the OA from granting the certificate.

As both situations involve the exercise of a discretion, the interests of the bankrupt are balanced against those of the creditors, the public and commercial morality or common honesty.

While it is true that a bankrupt’s property automatically vests in the OA, the OA is not automatically entitled to a bankrupt’s income.

He has to apply to the court for an order to receive the bankrupt’s salary for distribution to the creditors.

The rationale for this is that the bankrupt must be allowed to support himself and those he has a legal duty to support.

He cannot be converted to a mere slave or a personal chattel of creditors.

Therefore, applying the same principle, because your husband has a duty to maintain his children until 21 years of age and in some situations, even longer, there is no reason why he cannot be ordered to pay them maintenance.

Gina Ho

Lawyer

Amolat & Partners

Source : Sunday Times - 5 Nov 2006

Q I UNDERSTAND that the only asset a bankrupt can continue to own is the money in his or her Central Provident Fund (CPF) account.

What happens if a bankrupt withdraws his CPF savings on reaching 55? Does he or she have to declare the withdrawn money to the Official Assignee (OA) and surrender it?

A You are correct in saying that a bankrupt can continue to own his or her CPF account.

When you reach 55 and withdraw your CPF savings, you are not obliged to inform the OA about the money, let alone surrender it to him.

As a bankrupt, you can also own an existing Housing Board (HDB) flat or buy one.

There is no need to apply to the OA for consent to buy HDB flats that are of five rooms or smaller.

However, if you intend to buy an HDB executive/maisonette flat, you must obtain the OA’s approval and similar consent is required for all bankrupts who want to sell their HDB flat.

They may also continue to own term life insurance policies with no cash value. Life insurance policies with cash values will be taken over by the OA.

Certain property is protected against your creditors by law, which means it cannot be sold or taken over by the OA.

They include trust property, HDB flats, CPF contributions, necessary household furniture, personal effects, limited tools of trade, life insurance policies that are expressly for the benefit of your spouse or children and compensation awarded for personal injuries or wrongful acts against you.

Under the CPF Act, CPF money withdrawn by a bankrupt on reaching 55 is protected from creditors.

You may apply to withdraw your CPF savings at 55 but you have to first set aside the following three amounts before withdrawing the excess in one lump sum:

Amount to meet living expenses between age 55 and 62, which is about $30,000.

Amount to meet retirement needs from age 62 (that is, the Minimum Sum which is $94,600).

Amount to meet hospitalisation expenses (that is, Medisave Required Amount which is $8,300) or Medisave Minimum Sum ($28,000), whichever is higher.

If you are unable to set aside the above amounts at age 55 or after, you will be able to withdraw only a monthly payment which is based on the Minimum Sum monthly payout for a member who retires in the same year you turned 55.

However, CPF savings (other than the three amounts mentioned above) used for the purchase of private property, are not protected from the mortgagee when the bankrupt reaches the age of 55.

Leong Sze Hian President Society of Financial Services Professionals

Source : Sunday Times - 29 Oct 2006

Q MY DAD has been bogged down by a share trading loss of more

than $500,000 as a result of the collapse of the Clob market back in the late 1990s.

Till this day, the monthly interest payment to the bank is about $2,000, which he has paid himself.

My dad is semi-retired and my mum is a housewife. My sister and I are working and live with our parents.

The property in which we live is under my dad’s name. He has been waiting for the property market to improve before selling the house and repaying the bank.

When my dad dies, will the bank insist on having an immediate sale of the property irrespective of the existing property market situation?

What significance (implied or otherwise) will there be, if my siblings and I were to help my dad pay the monthly interest? Will we become the implied guarantor to repay the bank instead?

If the property was to be sold and the proceeds are insufficient to repay the bank (and my dad is prepared to declare bankruptcy), will my siblings and I (and our spouses) be implicated and be forced by the bank/courts to help repay my dad’s debt?

Would the act of us moving out of the property make a difference?

A The bank can sell the property at any time it deems fit since the death of your father would be an event of default and the bank is not obliged to wait for better market conditions.

Your fears that the bank may ‘dump’ the property at a low price may be unfounded because the bank, as the mortgagee, would have a vested interest in obtaining the best possible price for the property.

Any informal arrangements between your father and you/your sister to help pay for the monthly instalments do not affect the relationship between the bank and your dad.

As far as the bank is concerned, it looks only to your dad for the debt. By the same token, your siblings and you have no interest whatsoever in the property notwithstanding your monetary contributions.

If the mortgage was taken out by your dad alone (and assuming none of you are the guarantors), only he would be liable to pay the bank for any shortfall after the sale of the property.

No one else, family or otherwise, will be forced or obliged to pay the bank, or become an ‘implied guarantor’.

Therefore, just because you are the occupiers of the property does not create a legal right against you by the bank.

By the same token, if the bank chooses to foreclose on the property and evict you in order to sell the property, as occupiers, you have no recourse since you have no rights vis-a-vis the bank.

Doris Chia Partner Harry Elias Partnership

Advice provided in this column is not meant as a substitute for comprehensive professional advice.

Source : Sunday Times - 29 Oct 2006