Building Networks Connecting Business Creating Opportunities
62
Advertorial
Singapore Beneficiary Nominations – Wealth Planning Made Simple
S
ingapore insurance bonds are useful for fulfilling the wealth and estate planning needs of British expatriates. As well as offering tax benefits when you return to the UK, it is possible to utilise insurance wrappers to ensure that wealth passes quickly and seamlessly to your heirs on death, and also to protect wealth against creditors during your lifetime.
There are two ways in which a policyholder can make a nomination, via a user-friendly, prescribed form that is supplied by the insurance company.
The advantage of making a nomination is that, on death of the policyholder, the beneficiaries can make a claim for the policy proceeds without the need to wait for Probate. This is particularly useful for expatriates, as their financial affairs tend to be more complex, resulting in delays in obtaining Probate, which may be required in multiple jurisdictions.
1. Revocable Nomination This type of nomination is the most simple and flexible option, in that the policy benefits can be expressed to be for anyone (i.e. not just spouse or children), and the nomination can be revoked or changed at any time. The policyholder remains in control of the bond during his or her lifetime, retaining the ability to switch investments, take withdrawals or surrender the policy. The ability to revoke the nomination at any time is particularly useful to cater for a change in circumstances, for example, getting married, the birth of a child, or getting divorced. The ability to nominate anyone is useful for leaving specific legacies, or to cater for individuals who are not automatically entitled to inherit wealth under Singapore intestacy laws (for example, an unmarried or same-sex partner).
A beneficiary nomination ensures that there will be a ready pot of money available whilst other assets are frozen pending Probate.
2. Irrevocable, or Trust, Nomination This form of nomination can be used only where the beneficiaries are the policyholder’s
This is due to the fact that Singapore insurance law contains a legal basis upon which policyholders can nominate beneficiaries, which applies to insurance bonds as well as to more traditional protection policies. Such nominations are not available to non-insurance investments, such as wrap platforms of direct stock holdings.
spouse or children. The principal benefit of this form is that a trust is declared over the policy and it does not form part of the estate or debts of the insured. Therefore, it is a very effective way of protecting assets from creditors if the individual is subsequently declared bankrupt. A potential downside to this option is that, should the individual be the sole trustee, he must obtain the consent of the beneficiary should he wish to change it. This could be an issue, for example, in the event of divorce. However, the law also provides the ability for the policyholder to appoint a fellow trustee to hold the policy with him. Should he wish to revoke the nomination, he only needs the consent of the other trustee to do so. If the trustee’s consent is not forthcoming, he retains the power to dismiss the trustee, and appoint a new one. Insurance-based solutions are simple, effective wealth planning vehicles that are well-regulated, and easy to arrange through your financial adviser. In both cases, the nomination facility allows the investor to control his wealth during his lifetime, thus retaining confidentiality, whilst ensuring quick and effective distribution to his chosen beneficiaries.