Have I Made Nominations?
Very often during financial planning, many tend to get carried away thinking about investments, returns to achieve a larger financial goal. They include back-up plans, hedges and other methods as an insurance against the unknown future. But what is often neglected is the actual planning of a legacy in an event that the worst of worse scenarios happen; Death and what we leave behind. What then happens to our assets and loved ones? Have you made sufficient preparations for those we leave behind? In your departure have you reduced or added more burden to your loved ones? Have I made nominations?
Nominations refer to assigning how assets or beneficiaries will get distributed to your loved ones. In Singapore, all assets belonging to an individual gets distributed according to Singapore’s intestate succession act by default. This includes our CPF funds that we sometimes forget due to its design to aid working Singaporeans in retirement without disrupting cash flow. Should you decide that the funds should be distributed differently, you should consider getting a CPF nomination even if you already have an existing will for your other assets because you cannot include CPF nomination in your will. Another consideration is that by default, intestate succession act automatically includes your spouse as a nominee. However, this doesn’t get revoked if you divorce. In such a scenario, a new nomination will have to be done unless you remarry which may leave your assets exposed.
(PS: If you had also made nominations before you got married, this nomination is automatically revoked upon marriage)
Another aspect to consider are the insurance policies and the nomination of beneficiaries. There are 2 kinds nominations among insurance companies; Trust (irrevocable) nominations or revocable nominations. There are a few differences between them with the former only assignable to your spouse, children/siblings. Upon a nomination, you also lose all control and rights over the policy and the terms and conditions take precedence. This also serves as a protection against creditors and gives a peace of mind. Revocable nominations on the hand, give the owner control and he/she may change the nomination at any time. In both cases, the nomination is handled by the company and there is no need for a will. Your financial consultant will guide you through the process of nomination. A table showing the differences between trust (irrevocable) nominations and revocable nomination can be found here .
Regardless the amount of assets you own, it is good faith and wise to plan well in advance on how your assets are distributed. All nominations and wills are confidential, and you should always seek the advice of a trusted financial consultant or legal advisor on how you can do so.
