Generally, when a person passes on with Will or without a Will, all his assets will be frozen before obtaining the Order. The Person Representative will apply for the letters of administration in the case of intestate or Grand of Probate in the case of testate to administer the deceased person’s estate.

The deceased’s estate will be utilised to pay off the reimbursement of funeral expenses, the estate administration fees, income taxes, the debts and liabilities, etc and the remaining balance of the estate will be distributed according to the Distribution Act 1959 or the Will.

Generally, when a person passes on with Will or without a Will, all his assets will be frozen before obtaining the Order. The Person Representative will apply for the letters of administration in the case of intestate or Grand of Probate in the case of testate to administer the deceased person’s estate. The deceased’s estate will be utilised to pay off the reimbursement of funeral expenses, the estate administration fees, income taxes, the debts and liabilities, etc and the remaining balance of the estate will be distributed according to the Distribution Act 1959 or the Will.

However, there are two types of assets ie EPF moneys and Insurance proceeds (if it is a Trust policy) will not be forming part of the estate of the deceased and be paid directly to the nominees upon one’s demise.

EPF nomination

With regard to EPF nomination, if you nominated someone in your EPF account, then the nominee is your beneficiary. On the other hand, the nominee in your Insurance policy may not be your beneficiary. It is depending on the relationship between the policy owner and the nominee at the time of making the nomination.

By paragraph 5(1) of the schedule 10 of the Financial Services Act 2013, a nomination by a policy owner, other than a Muslim policy owner, shall create a trust in favour of the nominee of the policy moneys payable upon the death of the policy owner, if (a) the nominee is his spouse or child; or (b) where there is no spouse or child living at the time of nomination, the nominee is his parent.

The subparagraph (2) states that a payment under subparagraph (1) shall not form part of the estate of the deceased policy owner or be subject to his debts.

Paragraph 6 states that a nominee, other than a nominee under subparagraph 5(1), shall receive the policy moneys payable on the death of the policy owner as an executor and not solely as a beneficiary and any payment to the nominee shall form part of the estate of the deceased policy owner and be subject to his debts and the licensed insurer shall be discharged from liability in respect of the policy moneys paid.

If you are not married and nominated your parents in your Insurance policy, then they are your beneficiaries of the Insurance proceeds. However, if you nominated someone other than your parents, then he or she only acts as an Executor and not as a beneficiary. When you pass on, he or she will claim the Insurance moneys and have to give it to the Personal Representative for the deceased’s estate.

If you nominated your parents when you don’t have spouse and / or children at the time of the nomination or nominated your spouse and/or your children in your Insurance policy, then they are your beneficiaries of the Insurance proceeds. However, if you nominated someone other than the persons mentioned above (the non-trust nominee), then they only act as an Executor and not as a beneficiary. When you pass on, they will claim the Insurance moneys and have to give it to the Personal Representative for the deceased estate. Therefore, if you want to benefit the non-trust nominees for your Insurance policy, it is advisable to have a particular clause in your Will stated that the Insurance moneys of the particular policy will be given to them.

Please take note that the above is only applicable for non-Muslim Insurance Policy Owner.

by Alvin Leow