Inheriting a DC Pension

crv1963

cjking wrote: »

So to answer the original question, yes money from pensions is definitely outside the estate, but you should try to receive it by taking over the pension rather than getting a cheque, as this will give you more options to avoid tax when you die.

That is my understanding too. Fortunately the sums involved in the estate will not push the parent into IHT territory. It is more the parent/ other sibling fear of breaking rules/ law. I did suggest it worth paying to see a solicitor to explain how to administer the estate for their peace of mind an hour explaining would be worth the cost. That fell on deaf ears!

crv1963

Sea_Shell wrote: »

Well I stand corrected, as I've done a bit more reading, and yes you can inherit a DC pension and keep it as a pension in the beneficiaries name, rather than it be paid out as cash.

So it could potentially (in the right circumstances) be inherited ad infinitum!!

Everyday's a school day!!

That is what we are hoping for with Mrs CRV DC Pot! I can see this rule changing in a future government seeking to increase tax intake by stealth, not thinking ordinary people might like to pass money down the generations as well as the significantly wealthy.

jamesd

HMRC has tried to get inheritance tax where a pension pot has been moved in the few years before death, arguing that the trust wasn't effective. Not relevant to this situation.

Sea_Shell wrote: »

However once the money has paid out to the beneficiary, it DOES become part of their estate going forwards. ... However the beneficiary can do a deed of variation to pass any monies on now, so that it doesn't become part of their estate.

A deed of variation can't be used because that only modifies inheritance by a will and that's not how the pension money arrived, outside the estate and not via a will.

Your correction about beneficiary and successor pensions being available is right and they aren't forced to withdraw the pension money and make it part of their estate.

However, if they are on means tested benefits, including Pension Credit, the money now needs to be disclosed because I assume they are over Pension Credit age. Prior to that age uncrystallised pots are disregarded. It's also subject to council care costs claims.