Pension payment to family after death

crunchie1

My friend has lost her father aged under 60. He had a pension which has a moderate sum of money to be paid at the discretion of the trustees to his survivors.

He died intestate and there is not enough money to pay off his outstanding debts with utilities etc, or even the cost of a basic funeral.

Am I right in thinking that any payments to his successors (he has 3 children aged over 23, no dependants, and no spouse) would be a payment to them rather than to his estate ?

The pension has confirmed the money exists and stated it will be paid at the discretion of their trustees. Does that mean they have discretion as to who gets it, or are they able to not pay it at all. It would make a huge difference with paying the funeral bill. I realise it could still be used for that first if it did go to the estate.

dunstonh

Am I right in thinking that any payments to his successors (he has 3 children aged over 23, no dependants, and no spouse) would be a payment to them rather than to his estate ?

Correct. It is outside of the estate (caveats apply as some really rare ones can be included)

The pension has confirmed the money exists and stated it will be paid at the discretion of their trustees. Does that mean they have discretion as to who gets it, or are they able to not pay it at all.

Trustees decide who get it. The terms of the scheme will decide if there is an amount to pay.

Bootsox

Did your late father do an "expression of wish", a form of declaration which the trustees can follow or ignore at their discretion (but more likely to follow)?

crunchie1

I don't know. The pension was started more than 20 years ago. If he did it would probably have been in his wife's (my friend's mother's) name. But they divorced many years ago and she has re-married. It would not be a problem if she did get the money as I believe she would divide it among her children anyway.

The real problem would be if it went into his estate as apart from being able to use it for the funeral, the rest would be swallowed by other debts.

Linton

crunchie1 wrote: »

My friend has lost her father aged under 60. He had a pension which has a moderate sum of money to be paid at the discretion of the trustees to his survivors.

He died intestate and there is not enough money to pay off his outstanding debts with utilities etc, or even the cost of a basic funeral.

Am I right in thinking that any payments to his successors (he has 3 children aged over 23, no dependants, and no spouse) would be a payment to them rather than to his estate ?

The pension has confirmed the money exists and stated it will be paid at the discretion of their trustees. Does that mean they have discretion as to who gets it, or are they able to not pay it at all. It would make a huge difference with paying the funeral bill. I realise it could still be used for that first if it did go to the estate.

You are correct that the pension does not form part of the estate. I believe the discretion of the trustees bit comes about in order to ensure that the payment isnt regarded as income to the estate. The trustees normally follow the pension owner's wishes as stated in the appropriate form filled in when the pension was set up. But if the wish is seen as perverse it could be over-ridden

greenglide

The real problem would be if it went into his estate as apart from being able to use it for the funeral, the rest would be swallowed by other debts.

So why is that a problem?

The pension scheme pays outside of the estate primary so that the recipients to not have to wait for probate to be completed before they can getting the money at these times.

It seems perverse if the children should get the money rather than it go to paying for the funeral and paying the debts.

If the death benefit from the pension does go to the children as seems likely, who is going to pay for the funeral? It should fall on the taxpayer!

crunchie1

The children have paid for the funeral, although some of them are in debt to do it. They were hoping this money would help with that debt.

The taxpayer would only be paying if there were no relatives with any earnings. That was never anyone's intention. There was a funeral insurance plan but it was not going long enough to pay anything. It is a lot of money to find for very young people who are just setting out in their first proper jobs.

The debts of the estate are not theirs.

Linton

crunchie1 wrote: »

The children have paid for the funeral, although some of them are in debt to do it. They were hoping this money would help with that debt.

The taxpayer would only be paying if there were no relatives with any earnings. That was never anyone's intention. There was a funeral insurance plan but it was not going long enough to pay anything. It is a lot of money to find for very young people who are just setting out in their first proper jobs.

The debts of the estate are not theirs.

The relatives are not under any legal obligation to pay for a funeral.

atush

Although as the children of the deceased they may feel (and seem to have) a moral obligation to pay for the funeral if not the debt.

So, no the children would not have to pay his debts, the debts die with him if his estate is nil.

As to the pension, make sure the trustees know that he and his wife were divorced, and let them know the names and addresses of all the children. I would imagine the pension will be split between them.