Pension "Death Grant"

VikingVixer

Hi all,

I'll try and keep my story as short as possible but need some guidance please with regards to a death grant from my late father's pension....

My father died recently and having not left a will, my sister and I split the estate 50/50, which is as per Intestacy laws.

During the estate valuation, my sister contacted my fathers pension provider to see what needs to happen there and was told that the pension will now close and that there would not be any payouts. FYI: My father had retired and was drawing his pension, but was actually working part time.

This week, I received a letter from the pension company stating that there was a "death grant" payable from the scheme and that I was the single beneficiary on the "Expression of wish" form, there was no mention of my sister.

Now, here's the reasoning that I am the sole beneficiary. My partner and I have a 8 year old son and he and my father (granddad) were inseparable, they were besotted with each other.

My father made no hesitation in stating that when he died, that everything he had he wanted to go to my son, and therefore he named me because he knew I would honour his wish and make sure we put the money aside, which we have.

Additionally, I think the reason she was not named was because her relationship with my father was a very strained one as she was always getting into trouble, big trouble... and suffice to say she has criminal convictions (including prison time) so he really didn't want much to do with her as he spent his entire life dealing with all her behavioural issues.

The situation is though, that my sister feels that she is entitled to half of the death grant as the rest of the estate was already split in half, and I can only assume that the reason the pension company said there was no money was due to privacy laws and as she was not named, wasn't entitled.

She will not accept the fact that my father and my son had such a close relationship and that he would have wanted the money to go to my boy and that she is now suggesting that she will "fight me" for her "share".

The internet is a wealth of information, both good and bad, and from what I have read, the death grant is nothing to do with a person's estate and is payable at the discretion of the provider.

So, here's the question.. Does she have any legal course of action she could take to secure her share. I have no issues paying it out if I am legally obliged to.

Just to tidy things up, both me and my sister ended up with about £28,000 each from the estate and the death grant is an additional £40,000 (i nice little fund for my son's university education) so we're not talking huge amounts of money.

Thankful for any advice.

Sea_Shell

As I understand it the pension payout falls outside the estate, so would not be subject to intestacy rules.

So I doubt that she could bring action against you (it would not be cheap either).

Depending on your relationship with your sister you MAY want to give her some as a gift, but this will be from your assets, not via a deed of variation (as it's not part of the estate)

VikingVixer

Sea_Shell wrote: »

Depending on your relationship with your sister you MAY want to give her some as a gift, but this will be from your assets, not via a deed of variation (as it's not part of the estate)

Just to keep the peace, and trying to keep the sibling relation together, I did offer 1/3rd of it but she said that "entitled" to half and would not settle for less.

crv1963

The Death Grant is at the discretion of the Pension Trustees and is outside of the estate. So the short answer is No she has no claim. Similarly you have no right to dispose of your young sons assets the money is now his. She could take legal advice and very quickly learn she has no claim.

I understand wanting to keep the sibling peace/ relationship but you cannot do this at any cost. Possibly a letter from a Solicitor explaining the legal position to your sister would be a few hundred pounds well spent and close the matter- paid for from your share of the estate?

Malthusian

VikingVixer wrote: »

Just to keep the peace, and trying to keep the sibling relation together, I did offer 1/3rd of it but she said that "entitled" to half and would not settle for less.

She has failed at negotiation. Keep the lot, and use £5 to buy her a copy of "The Art of the Deal" for Christmas.

If you thought her sororal friendship was worth £20k you'd have already handed it over.

crv1963 wrote:

Similarly you have no right to dispose of your young sons assets the money is now his.

Nothing is the OP's son's. The expression of wish named the OP and the money is the OP's to do what he wishes with. Which is to fund his son's university education.

OP: don't rush to pay your son's university expenses. He should consider taking out student "loans" and then you could help him pay them off if and when he earns enough over the repayment threshold to make it worthwhile. (If something resembling the current graduate tax system is still in place when/ if he goes.)

The money was to benefit your son, not pay voluntary tax to the Government.

Albermarle

Just to tidy things up, both me and my sister ended up with about £28,000 each from the estate and the death grant is an additional £40,000

Apart from the 'sister' issue you should consider how best to invest the money for the future . Any money you might need in the short/medium term ( < 5 years ) should be kept in a safe savings account ( shop around for best deal ) . Any money that will not be needed for 10 years + should be invested in the funds related to the stock market where they should grow more than inflation at least .
If you need any guidance on investing then the forum can help.

crv1963

Malthusian wrote: »

Nothing is the OP's son's. The expression of wish named the OP and the money is the OP's to do what he wishes with. Which is to fund his son's university education.

OP: don't rush to pay your son's university expenses. He should consider taking out student "loans" and then you could help him pay them off if and when he earns enough over the repayment threshold to make it worthwhile. (If something resembling the current graduate tax system is still in place when/ if he goes.)

The money was to benefit your son, not pay voluntary tax to the Government.

OOps I misread that point. You are correct. I still would advise not parting with the monies, and you're also correct in your point about not paying the university fees- there will be lots of changes between now and when/ if OP son goes to university, with possibly other demands placed on the money, housing/ travel/ car being a few that spring to mind.

SonOf

It is possible for someone to challenge the expression of wish. However, the time to do that is before payment. Once paid, it is no longer in the hands of the administrator/trustees as they acted on the expression of wish and had no reason to consider it wrong.

Unless the father had a mental illness that allowed the decision to be manipulated, there is no reason for this expression of wish to be overruled. A lot of parents will leave out a child as the beneficiary for a whole range of reasons. Legal action is possible but would cost more than the amount involved and would be destined for failure if the father was in a sound state of mind when he made the nomination.

Malthusian

To expand on what SonOf said, the trustees have absolute discretion over who they pay the benefits to.

This means a challenge before they pay out the money can be worthwhile, because the trustees may change their mind about how to allocate the money. Absolute discretion means they can make your father's expression of wish into a paper plane if they like.

A challenge after they pay out the money by contrast is a total non starter, because absolute discretion. The trustees would have had to have erred in law (which they haven't).

Even if the father was up a tree dressed as Napoleon when he made his expression of wish, I'm not convinced it would help the sister one bit, because the pension trustees still had absolute discretion to pay all the money to the OP.

atush

Your sister is entitiled to nothing. Keep the money for your son (or yourself). It is outside the estate and not covered by intestacy.

Ganga

Could the Grandfather not have made his grandson his benificiary ,this would have by-passed the blacksheep daughter.