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  • FIRST POST
    • TrickyDicky101
    • By TrickyDicky101 16th Jul 17, 6:12 PM
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    TrickyDicky101
    my father's flexible drawdown pension fund post his death
    • #1
    • 16th Jul 17, 6:12 PM
    my father's flexible drawdown pension fund post his death 16th Jul 17 at 6:12 PM
    My father (who is 76 years old and in very poor health) has a pension pot invested in a flexible drawdown product with OMW. He has taken the full 25% tax free cash in the past so any further drawdowns are potentially taxable (and indeed are taxed due to his other taxable income).

    He is in very poor health and has asked what happens to his pot should he die.

    I believe (but could be wrong) that in accordance with his wishes/will the pot will effectively become my mother's (who is 72) and she can thus make darwdowns against it.

    I have stated that any such drawdowns will form part of her taxable income in the year of drawdown so will likely be taxed (due to her other taxable income).

    Am I correct? There is no tax payable on my father's death I presume - only when my mother elects to drawdown (according to her tax code/other taxable income)?

    Many thanks for any replies.
Page 1
    • Fermion
    • By Fermion 16th Jul 17, 6:36 PM
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    Fermion
    • #2
    • 16th Jul 17, 6:36 PM
    • #2
    • 16th Jul 17, 6:36 PM
    An Income Drawdown pot can be passed down on death to a spouse or other beneficiaries such as children and grandchildren but your father needs to formally document his wishes via a "Expression of Wish" document which needs to be registered with his flexible drawdown provider.

    HL have a very good document which explains the process and can be downloaded from https://www.hl.co.uk/free-guides/what-happens-to-your-pension-when-you-die

    Interestingly, since the 2015 pension changes the pension pot can passed down through generations and a taxable drawdown income can taken by beneficiaries (such as children or grand children) even if they haven't reached pensionable age. In this situation the drawdown pot becomes a Beneficiary Drawdown which does not count towards pension Lifetime limits.

    For children and grandchildren to benefit in this way though the pension pot holder MUST formally nominate then as beneficiaries via a Expression of Wish. Suggest you father contacts his pension provider ASAP.
    • TrickyDicky101
    • By TrickyDicky101 16th Jul 17, 6:59 PM
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    TrickyDicky101
    • #3
    • 16th Jul 17, 6:59 PM
    • #3
    • 16th Jul 17, 6:59 PM
    Many thanks Fermion - my father's pensions/investments are all managed through an IFA (who isn't cheap and is paid on a % fee basis so he can do the work ) so I will get my father to contact him to ensure everything is in place.

    My father would have asked the IFA the same question but I tend to respond quicker (due to the good people of MSE)!
    • bigadaj
    • By bigadaj 16th Jul 17, 8:02 PM
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    bigadaj
    • #4
    • 16th Jul 17, 8:02 PM
    • #4
    • 16th Jul 17, 8:02 PM
    Many thanks Fermion - my father's pensions/investments are all managed through an IFA (who isn't cheap and is paid on a % fee basis so he can do the work ) so I will get my father to contact him to ensure everything is in place.

    My father would have asked the IFA the same question but I tend to respond quicker (due to the good people of MSE)!
    Originally posted by TrickyDicky101
    I'd check with the ifa whether he coamiders this additional and would charge accordingly, he shouldn't but it's technically outside what he probably committed to.
    • TrickyDicky101
    • By TrickyDicky101 16th Jul 17, 8:43 PM
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    TrickyDicky101
    • #5
    • 16th Jul 17, 8:43 PM
    • #5
    • 16th Jul 17, 8:43 PM
    I'd check with the ifa whether he coamiders this additional and would charge accordingly, he shouldn't but it's technically outside what he probably committed to.
    Originally posted by bigadaj
    A valid consideration - I have set things in motion (I have PoA over my father's affairs so can - and do - deal with the IFA directly). I will update the thread in due course.
    • Malthusian
    • By Malthusian 17th Jul 17, 10:34 AM
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    Malthusian
    • #6
    • 17th Jul 17, 10:34 AM
    • #6
    • 17th Jul 17, 10:34 AM
    I'd check with the ifa whether he coamiders this additional and would charge accordingly, he shouldn't but it's technically outside what he probably committed to.
    Originally posted by bigadaj
    If the OP's father is paying him an annual % retainer rather than on a time-cost basis it really shouldn't be.

    An Expression of Wish should really have been completed when the pension was set up originally - and it's perfectly possible that it was. Both Old Mutual Wealth and the IFA will be able to easily confirm.

    Your understanding of the tax situation is correct, by the way.

    When/if the pot is passed to your mother, she will need to make her own Expression of Wish to ensure her children can inherit the fund as a drawdown plan, rather than having to take it as a lump sum (which would be taxed all in one go).
    • TrickyDicky101
    • By TrickyDicky101 17th Jul 17, 11:22 AM
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    TrickyDicky101
    • #7
    • 17th Jul 17, 11:22 AM
    • #7
    • 17th Jul 17, 11:22 AM

    An Expression of Wish should really have been completed when the pension was set up originally - and it's perfectly possible that it was. Both Old Mutual Wealth and the IFA will be able to easily confirm.

    .
    Originally posted by Malthusian
    Yes - this is exactly what I have asked the IFA to confirm. Hopefully will be completely straightforward to submit an EoW if one isn't currently held.
    • TrickyDicky101
    • By TrickyDicky101 18th Jul 17, 1:52 PM
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    TrickyDicky101
    • #8
    • 18th Jul 17, 1:52 PM
    • #8
    • 18th Jul 17, 1:52 PM
    Brief update - the Expression of Wish was already lodged with the OMW (as confirmed - and indeed copy provided - by the IFA).

    Thanks everyone
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