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02/06/2014

A recent adviser survey* by Skandia International, part of Old Mutual Wealth, showed there is an opportunity for advisers to make greater use of ‘nominations’ on offshore bonds. This little known feature can actually add significant value and can help the client achieve some of the benefits of a trust without actually placing the bond in a trust. Not many providers offer nominations on bonds, which could explain why nearly half of UK advisers are unaware of what a nomination is.

A nomination on an offshore bond enables the policyholder to state who they wish to pass the bond proceeds to on their death. It is a legally recognised method of ensuring assets get passed on to the correct people, and it means the proceeds can be passed on to the beneficiaries without the need for probate. Whilst a nomination might have some of the benefits of a trust, it is not technically deemed a trust, and the nominated assets remain within the policyholder’s estate and continue to be owned by them until they die.

Not being deemed a trust does have some benefits as it removes the reporting and administrative duties involved in running a trust. This makes it an attractive option for those who don’t want to set up a trust, but want some peace of mind knowing that on their death, the assets will be passed on to the person (or persons) nominated by them without any delay.

Whilst using a trust may still be the right route for many, especially those seeking Inheritance Tax planning, there are some situations where a nomination might be a preferred solution. For example, the client may be young and not want to set in stone the beneficiaries of their estate (so don’t want to set up a bare trust). Whilst a discretionary trust provides more flexibility to add or change beneficiaries, the client may not want to pay the upfront tax charge of 20% should it be a large investment. 

A nomination can be applied for at any point in time and clients can choose either a revocable or irrevocable nomination. A revocable nomination can be removed or changed at any point, giving the policyholder complete flexibility and control. An irrevocable nomination can only be changed with the consent of the nominated beneficiary. 

Not many providers offer this facility on their offshore bond range, so advisers need to check before they offer their clients this facility. If a provider does not offer a nomination facility, then the client will need to either set up a trust, or rely on a will to allocate assets on death, however, a will is subject to probate and can be disputed.

Interestingly, the survey results show a split between jurisdictions, with advisers in Europe, Asia and the Middle East more aware of what a nomination is, with less than a third of advisers unaware of what a nomination is. This compares to nearly half of advisers in the UK who are not aware of what it is.

Paul Schrijver, international specialist at Skandia International, comments:

“In the UK, there is an opportunity for more advisers to become aware of the benefits of using a nomination. It is not necessarily an alternative to a trust, but may help in situations where a trust is not suitable. A nomination can provide a great half way house between a will and a trust, and can offer clients peace of mind knowing the assets will be passed to the right people on their death without the delay of probate.” 

*Skandia International Q2 2014 adviser survey, completed by 377 financial advisers from across the globe.

For more information contact

Sophie LentonOld Mutual Wealth02380 916 77007834 499 558
Amelie ShepherdOld Mutual Wealth02380 916 09107834 499 596

Notes to Editors:

Old Mutual Wealth is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Old Mutual Wealth oversees £131.3 billion in customer investments (as at 30 September 2017).

It has an adviser and customer offering spanning: Financial advice; investment platforms; multi-asset and single strategy investment solutions; and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Old Mutual Wealth Private Client Advisers; discretionary fund management business, Quilter Cheviot; and Old Mutual Wealth’s multi-asset investment solutions business.

Old Mutual Global Investors (‘OMGI’) is the asset management business of Old Mutual Wealth with £39.8bn funds under management (as at 30 September 2017). On the 19th December 2017, Old Mutual Wealth announced that it has agreed to sell its Single Strategy asset management business to the Single Strategy Management team and funds managed by TA Associates. The proposed transaction is subject to customary closing conditions, including regulatory approvals. 

Following managed separation from Old Mutual plc, Old Mutual Wealth will rebrand to Quilter plc. Each of the businesses within the Quilter Plc group will be rebranded over a two-year period, with the exception of Quilter Cheviot, which will retain its existing name.

Old Mutual Wealth is part of Old Mutual plc, a FTSE 100 group that provides life assurance, asset management, banking and general insurance. Old Mutual is trusted by more than 19.4 million (as at 31 December 2016) customers across the world and has a total of £212.3 billion of assets under management (as at 30 June 2017).

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