Private Pensions - who benefits if I die before claiming?

cloggsman

I have a private pension plan in which it states, that if I were to die before my retirement date,my wife would be entitled to recieve the total ammount as a lump sum payment.
My question is this," How long would she have to be living after my death,to be able to claim?" For instance if we were involved in an accident,and I died at the scene,and she then died later in hospital,should the policy pay the money into her 'ESTATE',and therefore be passed on to our beneficieries ?

dunstonh

My question is this," How long would she have to be living after my death,to be able to claim?"

1 second.

For instance if we were involved in an accident,and I died at the scene,and she then died later in hospital,should the policy pay the money into her 'ESTATE',and therefore be passed on to our beneficieries ?

Yes. Or the trustees may choose to divert the money to the next person in line directly as to avoid any potential for inheritance tax.

Iancfp

In your senario as your wife would have been unable to make a claim trustees would look for other beneficiaries
Pension providers (I am a SIPP Trustee) will almost never pay to estate because of IHT

Note I am Chartered Financial Planner and award winning Independent Financial Adviser but I can only give advice to clients who have given me their financial details. Any comments given in open forum are my own thoughts and are designed merely to assist and do not constitute advice

jamesd

Pensions are normally written in trust. The trustees are the people who formally decide who gets the money. An expression of wishes form can be provided by you to tell them how you want the money to be distributed.

You can use the expression of wishes instructions to say how you want a range of cases to be handled.

Try to avoid getting money paid into an estate if you really want it to go to children of the person's estate. Avoiding it avoids inheritance tax. Avoiding inheritance tax is one reason why insurance is written in trust. The ability to pay out before an estate is settled is another.

In the case outlined the trustees should be told that you prefer the money to go directly to the beneficiaries of her estate rather than actually into her estate. But the beneficiaries of her estate can be the subject of a legal battle. So instead you should name specific individuals and/or relationships (children with both of us as biological parents established by DNA testing, children of one of you but not the other, children adopted, assorted family members etc.). Once you've removed the link to her estate the trustees can then go back to paying out quickly instead of possibly having to wait for a legal battle to be resolved.

Trustees may ignore wishes in cases like remarriage or new children being born when there is no provision in the instructions for how to handle this. They are likely to assume that you did want to provide for the new children. You can express a different wish if you want to.