Death benefit nomination

bflare

I am struggling a little deciding who to put down for my nominee's. I have a 12 year old Son that I would like any pay out to go to but obviously at the moment he is only 12. I am separated from his mother & originally I did have her down so that if I did pass away before my son became 18 she would get the cash & this would hopefully get used towards my son's care. However, due to recent events & her behaviour I no longer trust her. I do not think the majority of the money would be used for him should anything happen to me. Therefore I would prefer a large percentage of it to go to him in the event of my death when he was old enough. If I did pass away before he was 18 would it be saved somewhere for him until he was old enough?


Maybe I should put my Mother down but she is struggling with her health. I do have a step daughter who is 25 who is my son's half sister but again I am not sure I can trust her.


Any advice please?

AnotherJoe

I take it this is a DC pension?
In the event he wasn't 18 then I'd expect it to remain invested as it was within the pension until he came of age. You could always nominate in your will, another trusted person or even, god forbid, a solicitor, to ensure there were no shenanigans with the money before he was 18

bflare

AnotherJoe wrote: »

I take it this is a DC pension?
In the event he wasn't 18 then I'd expect it to remain invested as it was within the pension until he came of age. You could always nominate in your will, another trusted person or even, god forbid, a solicitor, to ensure there were no shenanigans with the money before he was 18

Yes this is a DC pension. It does mention a that I can specify a trust on the nomination form. Does this mean a trust fund such as a Junior isa?

Malthusian

bflare wrote: »

If I did pass away before he was 18 would it be saved somewhere for him until he was old enough?

Yes. The trustees would invest the money until he was 18, at which point he would be absolutely entitled to withdraw it.

As you don't trust the ex-wife you should not only nominate the son but nominate who you would want the trustees to be in the event you died before he reached majority. If you don't his mother is likely to end up as trustee.

Yes this is a DC pension. It does mention a that I can specify a trust on the nomination form. Does this mean a trust fund such as a Junior isa?

A Junior ISA is not a trust but a tax wrapper (though funds in a Junior ISA are held in bare trust for the child).

It means any kind of trust. It's aimed at people who want to leave their money to a discretionary trust or similar.

AnotherJoe wrote: »

You could always nominate in your will, another trusted person or even, god forbid, a solicitor, to ensure there were no shenanigans with the money before he was 18

The money in the pension is outside the estate so his Will will have no relevance.

bflare

Malthusian wrote: »

Yes. The trustees would invest the money until he was 18, at which point he would be absolutely entitled to withdraw it.

As you don't trust the ex-wife you should not only nominate the son but nominate who you would want the trustees to be in the event you died before he reached majority. If you don't his mother is likely to end up as trustee. QUOTE]


So, on the form it says "I would like the scheme administrator to pay any lump sum death benefit to trustees as detailed in section 2.1 and / or the beneficiaries named in section 2.2 7 the proportions set out below"


So would I basically for instance put my mother as a trustee & my son as a beneficiary & then my mother would get the majority of the money which would then be used on him if he was under 18? For instance 20% to my mother & 80% to my son for when he turned 18?


I am sorry I sound clueless about this but I have no idea about these things. Thanks for your help.

Malthusian

bflare wrote: »

So would I basically for instance put my mother as a trustee & my son as a beneficiary & then my mother would get the majority of the money which would then be used on him if he was under 18?

Your son would get the money and your mother's job would be to invest it prudently on his behalf until he turned 18. One of your mother's legal duties would be to keep the son's money separately from her own.

You should name at least one other trustee, especially if there is a significant chance that your mother will not live past your son's 18th birthday.

It would be worth ringing the pension fund up and asking if they will accept a letter, e.g. "In the event of my death I wish the trustees to consider paying the benefits to my son [son's full name], with [X] and [Y] to be appointed as trustees should my son not have reached the age of majority at that time." It may be easier to send a letter in this case as Expression of Wish forms often don't have a space to specify trustees for minor children.

If they insist on you using the form, you should be filling out the section of the form for individual beneficiaries, not trusts.

For instance 20% to my mother & 80% to my son for when he turned 18?

If that's your nomination then 20% will be your mother's money for her to spend on herself.

Silvertabby

When LGPS members asked me what they should do in similar circumstances (Most DB schemes do pay death grants in the event of death before retirement or within 5 or 10 years post retirement) I would ask who would pay for their funeral.

Unless they knew that they would leave sufficient easy access cash, one option would be to leave a %age to the person most likely to arrange the funeral, with the remainder in trust for the minor child/children.

Yes, this money would then be the personal property of the recipient, to spend as they wish, but most people would do the decent thing.

Malthusian

Paying some of the benefits into the estate would make more sense if providing for a funeral was the aim. The executors can use that to pay for the funeral and there is no worry over whether the beneficiary will do the decent thing or not.

If Inheritance Tax was an issue then having enough cash on hand to pay for the funeral almost certainly wouldn't be.

Silvertabby

Malthusian wrote: »

Paying some of the benefits into the estate would make more sense if providing for a funeral was the aim. The executors can use that to pay for the funeral and there is no worry over whether the beneficiary will do the decent thing or not.

If Inheritance Tax was an issue then having enough cash on hand to pay for the funeral almost certainly wouldn't be.

I was thinking along the lines of the executor being the person who would arrange the funeral. And speed. Child's trust apart, a death grant paid to a nominated beneficiary could be paid within a couple of weeks of the death (my record was 5 days), whereas paying it to the estate is a lot more complicated,

And you'd be surprised at the number of people with a lot of assets but very little cash.