5.12 Nomination of beneficiaries
Some societies choose to include a section in their share application form that encourages the applicant to nominate one or more beneficiaries of their shares in the event of the nominator’s death. This may be seen as a promotional tactic to encourage applicants to think of share capital as a long-term investment for the benefit of future generations.
The Co-operative and Community Benefit Societies Act 2014 Sections 37-40 requires societies to maintain a record of members’ nominations of who will inherit their property in the society in the event of their death. These nomination rights extend to all forms of property in the society, including loans, deposits and shares. Nomination rights only apply to the first £5,000 of a member’s property; any amount above this has to be resolved with reference to the deceased person’s probate. Section 40 allows a society to distribute property up to £5,000 amongst such persons as are entitled to receive it, without any nomination under Section 37, or letters of administration or probate. However, a society may decide not to rely on Section 40, and require a letter of administration or probate as firm evidence of entitlement in all instances. If the beneficiary is already a member of the society, the maximum individual shareholding rule still applies and if it is exceeded any excess should either be paid in cash or converted into a loan. Business relief from Inheritance Tax may be available for withdrawable share capital in some societies (see Section 8.7).
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