Almost everyone buys policies. But do we also make it a point to nominate beneficiaries? Compared to Will-writing which costs money and tends to be more troublesome, making nominations for your policies and CPF monies is as easy as it can get!
Will-writing is probably the most common Estate Planning method that we know of. However, if you recall from Oct 2017’s Monthly Digest, CPF savings cannot covered under your Will. And having to constantly update your Will each time you purchase a new policy, may not be the most practical option. Hence, Estate Planning needs to go beyond just having a Will, and Nominations tend to be just as necessary.
Part One:
Can I make a nomination for my insurance policies?
1. Trust (irrevocable) Nomination
2. Revocable Nomination
Part Two:
Cash Nomination (the default nomination type): Your beneficiaries will receive your CPF savings in cash via cheque/ GIRO.
Enhanced Nomination Scheme (ENS): Your beneficiaries will receive your CPF savings in their CPF accounts.
Special Needs Saving Scheme (SNSS): Beneficiaries who are children with special needs, can receive their deceased parents’ CPF savings on a monthly basis.
Part Three:
Other common considerations
If you have beneficiaries below the age of 18, or are vulnerable persons, you may prefer to distribute your insurance policies’ proceeds and CPF monies through an Insurance Trust Nomination and CPF ENS/ SNSS respectively. This can prevent any improper use of the money by your beneficiaries’ legal guardian. #In the absence of next-of-kin, guardian appointed by Deed or Will, any person can apply to be appointed legal guardian of the child
You cannot make Trust Nominations for policies funded with CPF monies as you would lose all rights and control over your CPF-funded policy. By regulations, you are required to retain complete control of your retirement funds for as long as you live.
CPF savings will be transferred to the Public Trustee Office (PTO) for distribution in accordance to Singapore’s Intestate Succession Act (ISA) in the absence of a CPF nomination, and a non-waivable fee ranging from 0.3% - 2.4% of the CPF monies will be charged.
Key benefits of making a nomination
Your beneficiaries will receive a significantly speedier payout (average turnaround time of 5 working days after the submission of complete paperwork). In contrast, the hassle of getting a court-appointed executor (usually a lawyer) to apply for the Grant of Probate or the Grant of Letters of Administration (which cost more than $1,000) to distribute your policies’ proceeds, can take 6 months.This can make a whole world of difference if your family has on-going expenses such as family allowance, an outstanding loan, your children’s education etc. Also, funeral expenses can easily cost $10,000.
You minimize any potential for conflict in your family, as all proceeds will be automatically paid out to your beneficiaries, based on the percentage share that you have allocated. In contrast, there is usually much chaos and confusion when assets are distributed by default, in accordance to the ISA.
If you would like to get started on your nominations, or maybe you are unsure how to do so, simply contact Chloe for a quick and easy walkthrough. Remember, you want to leave your family a loving legacy, and not a legal mess.
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