What happens to the Child Development Account upon death?
What is a Child Development Account (CDA)?
The Child Development Account (CDA) is a special co-savings scheme for children. It is governed by the Singapore's Child Development Co-Savings Act which aims to encourage us to have more children!
It provides “goodies” (e.g. government contributions and co-matching) but also comes with certain “strings attached” (e.g. what can the money be used for and where the money will go next). These rules have changed slightly over the years and the following is the latest extract from https://www.madeforfamilies.gov.sg/raising-families/baby-bonus:
Every Singaporean child will receive $3,000 called the CDA First Step. This is automatically deposited by the Government when the CDA is opened for the child at any of the following banks – DBS/POSB, OCBC or UOB. After this, parents who continue to save into the CDA will enjoy dollar-for-dollar matching of their savings from the Government, up to the maximum Government co-matching amount.
Parents can save into and use the CDA at any time before 31 December of the year their child turns 12 years old. After the child turns 12, the remaining savings in the CDA will be transferred to the child’s Post-Secondary Education Account ( PSEA)*. Parents who have not saved up to the CDA Government co-matching cap can continue to contribute to the PSEA and receive the Government’s matching grant until the cap is reached, or when the child turns 18 years old, whichever is earlier.
*Subject to a cap, comprising the sum of the applicable CDA Government co-matching cap (based on the child’s birth order), the equivalent deposits made by parents, any ad-hoc top-ups to CDA made by the Government, and accrued interests.
Is the CDA like a JOINT bank account between the parent and the child?
No. It is regulated by the Child Development Co-Savings Regulations which has rules that is different from how your normal bank account works.
When you open a Child Development Account for your young child, the money is for your child and you as the parent nominates a person to be the Trustee of the account. Most parent nominate themselves as the Trustee.
What happens if the Trustee dies?
The Child Development Co-Savings Act section 4 spells out quite a list of compulsory substitution of the Trustee in various events such as where custody, care and control of the child is granted (e.g. during a divorce), or where the child is adopted etc.
In the event where the Trustee is dead, it shall be substituted by the child's legal guardian (e.g. the surviving parent or the guardian appointed by a Will). If there's no other legal guardian, then it shall be substituted with Personal Representative of the dead Trustee (e.g. his Executor or Administrator).
Where does the CDA money goes to if the child dies?
It shall be paid to the Public Trustee to be distributed according to the Intestate Succession Act. For Muslim, it will be distributed according to section 112 of the Administration of Muslim Law Act (Cap. 3).
One special thing about CDA is that it DOES NOT form part of the deceased child’s estate or to be subject to the child's debts.
The claim application details and the fees involved can be found here: https://pto.mlaw.gov.sg/deceased-cpf-estate-monies/edusave-psea-cda/