We nominate beneficiaries for various reasons, including:
Life insurance policies: Ensure that loved ones receive the policy’s payout (death benefit) in the event of the policyholder’s passing.
Retirement funds: Determine who inherits the remaining balance in the fund, such as a pension or provident fund.
Estate planning: Distribute assets, property, or investments according to the owner’s wishes after their passing.
Bank accounts: Allow nominated individuals to access funds in the account, such as a payable-on-death (POD) account.
Tax efficiency: Minimize taxes and fees associated with transferring assets after death.
Simplify probate: Streamline the process of distributing assets, reducing the need for lengthy and costly legal procedures.
Ensure minor children are provided for: Appoint a guardian or trustee to manage inheritance on their behalf.
Comply with South African laws: Align with regulations governing inheritance, wills, and estate planning.
Remember to:
Review and update beneficiaries regularly (e.g., after life events like marriage, divorce, or the birth of a child)
Consider alternative beneficiaries in case your primary choice predeceases you
Seek professional advice from a financial advisor or estate planner to ensure your wishes are carried out correctly.
Remember to:
Review and update beneficiaries regularly (e.g., after life events like marriage, divorce, or the birth of a child)
Consider alternative beneficiaries in case your primary choice predeceases you
Seek professional advice from a financial advisor or estate planner to ensure your wishes are carried out correctly.
A typical beneficiary nomination form for retirement funds, life insurance policies, or other financial products may include the following information:
Beneficiary details:
Name, ID number, Date of birth, Relationship to the member/policyholder
Primary beneficiary (first choice)
Contingent beneficiary (alternate choice if primary beneficiary predeceases)
Beneficiary percentage allocation:
Specify the percentage of the benefit to be allocated to each beneficiary (e.g., 50% to spouse, 25% to child 1, 25% to child 2)
Special instructions (optional):
Any specific wishes or instructions regarding the benefit distribution
Trustee nomination (if applicable)
Signature and date:
Witness signature and date (if required):
The form may also include additional sections or requirements, such as:
Dependent verification: Proof of dependency (e.g., birth certificate, marriage certificate)
Trust documentation: Supporting documents for trusts (e.g., trust deed, letters of authority)
Tax information: Tax-related information (e.g., tax reference number, tax clearance certificate)
Beneficiary details:
Name, ID number, Date of birth, Relationship to the member/policyholder
Primary beneficiary (first choice)
Contingent beneficiary (alternate choice if primary beneficiary predeceases)
Beneficiary percentage allocation:
Specify the percentage of the benefit to be allocated to each beneficiary (e.g., 50% to spouse, 25% to child 1, 25% to child 2)
Special instructions (optional):
Any specific wishes or instructions regarding the benefit distribution
Trustee nomination (if applicable)
Signature and date:
Witness signature and date (if required):
The form may also include additional sections or requirements, such as:
Dependent verification: Proof of dependency (e.g., birth certificate, marriage certificate)
Trust documentation: Supporting documents for trusts (e.g., trust deed, letters of authority)
Tax information: Tax-related information (e.g., tax reference number, tax clearance certificate)
When nominating a beneficiary, consider the following:
Who to nominate: Family members, Spouse, Children (minor or adult), Parents, Siblings
Dependents: Financially dependent relatives (e.g., grandchildren, nieces, nephews). People relying on you for support (e.g., a disabled family member)
Charitable organizations: Consider leaving a legacy to a favourite charity or cause
Trusts: Testamentary trusts (created through your will) for minor children or dependents. Inter vivos trusts (created during your lifetime) for asset protection or tax planning. Read more about Trusts on our Trust page.
Business partners: If you’re a business owner, consider nominating partners or colleagues
Estate: If you don’t have a specific beneficiary, you can nominate your estate, which will distribute assets according to your will or the Intestate Succession Act. Visit the Estate Planning Page for more information.
No Beneficiary Nominated
What happens if I do not have a nominated beneficiary
If you pass away without having selected a beneficiary for your retirement funds, life insurance policies, or other financial products, the funds will typically be paid out according to the relevant laws and regulations.
Retirement funds (e.g., pension, provident, or retirement annuity funds)
The fund’s trustees or administrators will typically try to identify and pay out the benefit to your dependents, such as your spouse, children, or other financial dependents.
If no dependents can be identified, the benefit may be paid into your estate.
Other financial products (e.g., bank accounts, investments)
The funds will typically form part of your estate and be distributed according to your will or the Intestate Succession Act (if you die without a will). You can read more about the Succession Act on the Will & Testament page
Life insurance policies
If no beneficiary is nominated, the policy payout will typically form part of your estate and be distributed according to your will or the Intestate Succession Act (if you die without a will). Our Life Cover vs Funeral Plan page has tips on how to effectively plan ahead
If the nominated beneficiary to your estate has passed before you, the following scenarios may occur:
- No alternate beneficiary: If you didn’t nominate an alternate beneficiary, the benefit will typically be paid into your estate. The estate’s executor or administrator will then distribute the funds according to your will (if you have one) or the Intestate Succession Act (if you don’t have a will).
- Alternate beneficiary: If you nominated an alternate beneficiary, the benefit will be paid to that person.
- Contingent beneficiary: Some policies or documents allow for a contingent beneficiary, who receives the benefit if the primary beneficiary has died.
- Beneficiary’s estate: If the beneficiary had an estate, the benefit might be paid into their estate, and their executor or administrator will distribute it according to their will or the Intestate Succession Act.
Consider nominating alternate or contingent beneficiaries to avoid potential issues.
What to consider when making your beneficiary nominations
If you have one or more policies in place, ensuring that you have appropriately nominated your beneficiaries and that your beneficiary nominations remain relevant to your needs as and when your circumstances change over time, remains an important part of the estate planning process. However, there are several intricacies when it comes to selecting your beneficiaries which should first be considered, beginning with understanding your intentions for the proceeds of the policy.
Read the MoneyWeb article HERE
Advantages of nominating a beneficiary
Dependants get preference over non-dependant beneficiaries, which means that the death benefit from your retirement fund won’t necessarily be distributed as specified on your nomination.
Read the Momentum article HERE