What happens after we die?
What is intestate law?^1
Intestate Law is an act that determines who gets what when 23 pass away without a Will. Under the intestate law, there are certain rules to determine who gets what.
What are nominations?^2 & ^3
We nominate beneficiaries and allocate how much of our inheritance that they will receive. Other than a natural person, a society, charitable organization, or business entity can also be nominated as a beneficiary. And we can make nominations for our CPF monies & our insurance policies. However, do note that a revocable nomination can be superseded by a Will that states otherwise in the distribution of the deceased’s assets. The exception is our CPF monies. CPF funds cannot be distributed through a Will. Without a nomination, intestacy
laws will determine who gets our CPF savings.
General rule of thumb:
Trust nomination > Will > Revocable nomination > Intestate Law
Should I do a nomination or leave it to intestate law?
Nominations are definitely a much more convenient choice for our beneficiaries for numerous reasons:
1. Nominations are free of charge and revocable nominations can be revised unlimited times at no cost.
2. We can nominate beneficiaries who may otherwise not be entitled to any money under intestate law. E.g. a godparent, a newphew/niece, a fiancé/fiancée.
3. We can specify the proportion that we wish to allocate to our beneficiaries. E.g. more to our mother than father if our parents are divorced and your mother was your primary caretaker. This will minimize unnecessary bickering between family members who feel that they deserve to inherit more money.
4. Beneficiaries can receive the insurance payout money as fast as 1-3 wks from the time the death claim is submitted.
5. For distribution by intestate law, a specialist probate lawyer needs to be appointed. This can cost anywhere from $3,000 to $7,000 or more.
6. The family must obtain a Grant of Letters of Administration, a court order that appoints the deceased’s next-of-kin as the personal administrator of the estate. And this can take 1-2
months. It will generally take several months before the family finally have access to their inheritance.
Additional points to consider when making nominations or a Will:
1. Money management
How financially savvy are our beneficiaries? I’ve seen older parents get persuaded by bankers to invest their inheritance in high risk products that they do not even understand. I’ve also see young beneficiaries spend all of their inheritance to buy a car.
2. What happens if our nominee is a minor?
The money will be paid to the parent/legal guardian when we pass away.^4 As for our CPF monies: the minor’s share will be transferred to the Public Trustee’s Office and held in trust until the minor hits the age of 18.^5 Only then, they will receive the proceeds.
There are many practical reasons for making a nomination and/or Will. But perhaps, the most important reason is that our family will be comforted to know that we loved them and wanted to take care of them even at the very end. If you’re unsure where to start, start by speaking with Chloe.
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