sipp property question

davey9998

one of the often quoted downsides of a pension is post crystallisation say with an annuity you can lose the fund that was built up on death. ok there are guarantees and you can have annuity protection but in the main death benefits aren't great.

with drawdown i gather the remaining fund is passed on less 35% tax.

what happens to say a commercial property in a sipp on death?
is it the case where if the benefits haven't been crystallised the property passes on tax free to the beneficiary?
or does the property die with the pension holder if he dies after vesting his benefits?

EdInvestor

davey9998 wrote: »

with drawdown i gather the remaining fund is passed on less 35% tax.

Yes.

what happens to say a commercial property in a sipp on death?is it the case where if the benefits haven't been crystallised the property passes on tax free to the beneficiary?

The property would be sold and the SIPP trustees would pay out the death benefit in cash to the beneficiary (tax free outside the estate).

or does the property die with the pension holder if he dies after vesting his benefits?

If the fund is in drawdown, the property would be sold and the proceeds of the SIPP paid out to the beneficiaries in cash as above but after deduction of 35% tax.That's assuming the beneficiary wanted it that way - s/he could keep the SIPP and draw an income from it or use the proceeds to buy an annuity also.