Discretionary trust for pension

economic

SeniorSam wrote: »

The nomination of your pension is usually to your spouse, so you will ned to speak with the pension company as others have already explained to you.

If you do find some difficulty with the particular pension provider in changing the beneficiaries to who you wish, you will need to take it further as you are entitled to nominate whoever you wish.

Sam

Thanks for the advice!

SeniorSam

economic. Not sure if you are aware, but there is a forum here on Probate and Wills if you feel you are looking for more information about such

http://forums.moneysavingexpert.com/forumdisplay.php?f=217

kidmugsy

economic wrote: »

So just so its clear in my head.. I need to confirm that the pension is held in a trust, if it isn't I should ask the pension provider to do so. Then I ask the pension provider to make my children the beneficiaries (letter of wishes) of the pension so that when me and my partner dies

No: I don't think the pension company can do anything about your partner if your letter of wishes asks them to pass the money to your children.

The company holds the money (almost always) "on trust"; your request to them isn't an instruction, but they would ignore it only if there were a compelling reason. So if you ask for them to give the money to the children, that's what you must expect them to do.

If your desire is something more complicated, such as the money being held for the potential benefit of your partner and of the children, then it's back to your setting up a trust with all of them named as beneficiaries.

System

kidmugsy wrote: »

If your desire is something more complicated, such as the money being held for the potential benefit of your partner and of the children, then it's back to your setting up a trust with all of them named as beneficiaries.

That I think is the traditional "spousal bypass trust", such as I set up some time before these new flexibilities became possible.
The purpose was a) to avoid my pension passing straight into my wife's estate and so adding to IHT problems on her death
b) giving potential benefit to all/any of our three children as required, but not handing out large sums to young people some still not 18
c) giving the options of either taking lump sums or drawing income in the light of unknown future events and needs.

All four are (or will be when 18) trustees and beneficiaries, which should reduce the risk of unfortunate decisions by any one. I know you can't and shouldn't plan your descendants lives for ever, but giving them some security to fall back on seems a good thing.

I'm still not quite sure whether the recent pension changes have made this exercise a waste of time or still sensible.

SeniorSam

Being 'of age' at 18 can sometimes be dangerous depending on the mental and adult attitude at that time. A high powered car or lending friends large sums of money would perhaps not enter the head of someone a little older.

Our Wills were changed from the original '18'to 25, but as it is a Discretionary Trust that is set up, money can pass earlier if the Trustees feel it is appropriate. Similar wording may be possible within a Trust for a pension, particularly if it is a large amount. Gifting hundreds of thousands to any 18 year old may not be such a good idea?

Sam

System

The main difficulty setting up a trust I think is finding suitable trustees.
Obviously they have to be much younger than you - no point in nominating your best friend and contemporary. So you want some people who are likely to be around for 30 years after you are dead.

kidmugsy

Clifford_Pope wrote: »

The main difficulty setting up a trust I think is finding suitable trustees.
Obviously they have to be much younger than you - no point in nominating your best friend and contemporary. So you want some people who are likely to be around for 30 years after you are dead.

Very true. It's rather like wondering who to appoint as executors for your will.

SeniorSam

Executors are usually spouse and children if old enough. Perhaps siblings or those you know to be honest and reliable and appreciate that there is a lot to do in becoming an Executor and Trustee. The most important thing is to make sure that they are prepared to act. So often people appoint who thay think will do a good job but fail to ask them and they refuse the post at the most important time.

Solicitors and other professional will do a good job, but their costs and fees will need to be met and they haven't spent years of study to qualify just to give their time away. Try to arrange a specific fee or maximum if appointing a professional.

Sam