Nominee & Trustee

Making a nomination helps ensure that your loved ones are protected financially should anything happen to you. You will want them to be able to access these funds as soon as possible. 

By appointing a nominee(s), the policy moneys can be disbursed much faster without the need to obtain the Grant of Probate or Letter of Administration or Distribution Order.

Without a nomination, your insurance company is not obligated to release the policy money until these documents are obtained, which may take up to a few years. 

A nomination is a right given to a policy owner, aged 16 or above, to appoint person(s) to receive policy moneys when an insurance policy claim is triggered.

A nomination is done by submitting a Nominee form through your insurance company. You will need to state the share per Nominee, nationality, NRIC/birth cert/passport number and address.

For example: Beloved spouse 50%, Ah boy 25%, Ah girl 25%

While there is no minimum age for non-Muslims, if your nominee is a minor, the funds would be held by your trustee.

For Muslims…

Claims by nominees below 18 are invalid as per Nomination Policy, effective Jan 1, 2017.

A Muslim policy owner may still make a nomination to ensure that the policy moneys can be distributed faster.

The Nominee of a Muslim policy owner receives the policy moneys only as an executor and distribution must be in accordance with Islamic laws.

In the event there is no nomination, the policy moneys will go to the Public Trustee and therefore may take some time to distribute.

As a Muslim, you can opt to give the insurance policy as a gift (hibah) while you are still living to ensure that he/she receives it’s benefits.

For a EPF nominee however, it is considered a gift and is given directly to the nominee. This can be done with an insurance policy assignment. 

What is a Trust vs Non-Trust Policy?

A trust policy distribution is not part of the estate and is free from creditors. A trust policy nominee can be your spouse, children, or parents provided there is no surviving spouse/children at the time of nomination.

A non-trust policy distribution is part of the estate and therefore subject to creditor’s claims.

Nominees act only as executors to distribute the proceeds according to the law. Do note that parents are non-trust nominees if there is a surviving spouse/children at the time of nomination.

Muslims are automatically non-trust nominees.

If your nominee dies and you are still alive, the eligible portion will go to your next-of-kin. If you have passed away, the eligible portion will go to your nominee’s next-of-kin.

EPF nomination

This refers to the process of naming a nominee among individuals or an approved institution.

Eligibility

• Member aged 18 and above
• Malaysian citizen
• OR non-Malaysian citizen, who has Permanent Resident status or became an EPF member before Aug 1, 1998.

EPF nominee recommendation

Muslim members are advised to nominate their next-of-kin, such as their spouse, children or parents.

Non-Muslim members can nominate any individual (recommended: next-of-kin i.e. spouse, children and parents).

An approved institution is like Amanah Raya Berhad (ARB). ARB will appoint a trustee for nominees below 18 years old. If a member chooses to nominate ARB as a nominee, ARB will become the administrator to ALL (100%) of the member’s savings.

What happens if BOTH you and your nominees die together?

If EPF savings are less than RM25,000:

• Initial sum of RM2,500 is paid to the next-of-kin
• Balance is paid after two months from death

If EPF savings are over RM25,000:

• Initial sum of RM2,500 is paid to next-of-kin
• Second payment of up to RM17,500 is paid after two months from death
• Balance is paid upon submission for Letter of Administration/Letter of Probate/Distribution Order/Faraid Certificate (costs may apply)

What is the deadline for submitting claims application?

For EPF, within one year of death, or it will proceed as if no nomination was made.

Trustee

A Trustee is an individual or member of a board given control or powers of administration of property in trust with a legal obligation to administer it solely for the purposes specified.

In discharging his/her duties, a Trustee must exercise the utmost diligence and be personally liable if there is any breach of trust.

Examples of a Trustee’s duties include:-

• Duty not to profit from trust
• Duty to be impartial
• Duty to account
• Duty against a conflict of interest or self dealing

A Trustee must be above 21 years of age and of sound mind.

A Trustee can be a non-Malaysian. However, you should ensure your Trustee stays long-term in Malaysia, else would need to travel here and may cause delays in estate proceedings.

Your Nominee can also be your Trustee but best to check with your insurance provider, bank or relevant party for more details.

You may opt not to appoint a Trustee. If unsure, consult your insurance company or life insurance agent.

However, if a trust nominee is changed or revoked, and there is no trustee, consent is required from the presumed trustee. A presumed trustee may be a spouse, child aged 18 and above or parent (if policy owner is single at the time of nominating a parent).

As of June 30, 2013 with Financial Services Act 2013, you may no longer appoint yourself as a Trustee in an insurance policy.

Your Trustee must be someone you trust. It makes sense in a way that you cannot appoint yourself as you would usually want a Trustee when you are not around/capable to act as one.

However, it may cause complications if you want to change your Nominee at a future date. Your Trustee would need to confirm the change of Nominee, sign forms and submit a copy of his/her IC.

Unless it is from a sibling to your parents/spouse/children then Trustee approval is not required. You can also check with your insurance provider if you can opt not to have a Trustee.

This article first appeared in https://mypf.my

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