IHT question about pensions 9 July at 7:14PM in Deaths, Funerals & Probate 18 replies 441 views

beavere38

I've started filling out the online form for the IHT estimate for my mum's estate. It has asked this:

These are any private pensions that XXXXX had. This does not include XXXXX’s state pension.

A private pension could be a personal pension or a pension from XXXXX’s employer.

• Did XXXXX have any private pensions?
  Yes
  Did XXXXX make any changes to their private pension in the 2 years before they died?
  
• Give an answer for did the deceased make any changes to a private pension in the 2 years before they died
• Value of remaining pension payments being paid to the estate

Mum had two pensions from a council she worked for and another that was originally dad's pension but was still paying out to her after he died. She was 89 and had been receiving pensions for many years. Will there be be any remaining pension payments being paid to the estate? I thought the pensions would just cease after death? Do I need to contact the various pension companies to ask for figures before I can complete this form? Thank you in advance.

xylophone

Will there be be any remaining pension payments being paid to the estate? I thought the pensions would just cease after death? Do I need to contact the various pension companies to ask for figures before I can complete this form? Thank you in advance.

If the pensions were paid in arrears, it is conceivable that money is owed to the estate.

beavere38

The pensions were small, she was getting about £200 per week including the state pension so should I just say there are no remaining pension payments due or do I need to speak to the pension companies and get an exact figure?

Savvy_Sue

beavere38 said:

The pensions were small, she was getting about £200 per week including the state pension so should I just say there are no remaining pension payments due or do I need to speak to the pension companies and get an exact figure?

You're sure there will be an IHT bill? Even if you divert your sister's estate via a Deed of Variation so it doesn't pass to your mother? 

If there won't be any IHT due, then you really needn't worry about the answers to this question - I mean, you still need to answer the questions, but if you know it won't make any difference to the end result, then it doesn't matter if the answer is 100% accurate. 

If it DOES matter, then a (hopefully) quick phone call would be sensible. 

Edited to add, as well as the possibility that Mum's estate will be owed some more pension, it's equally possible that some will need to be repaid, thus reducing the size of Mum's estate. 

beavere38

My thoughts exactly they could have overpaid the pension as it has taken several days to notify them mum has passed. The estate won't be liable for IHT as mum was widowed so the threshold should be £650k and I'm at no more than about £310k total at the moment. 
I've not seen anywhere to mention my sisters estate on the form so far should that be under "money owed" to her or does that come later as I work through the questions?
It is still possible a will turns up for my sister so I am currently estimating mum will have another £200k or so in her estate.

AnotherJoe

Surely you need to sort your sisters estate first assuming she predeceased your mother?

And my commiserations to you.

Savvy_Sue

AnotherJoe said:

Surely you need to sort your sisters estate first assuming she predeceased your mother?

And my commiserations to you.

Yes, but ... the suggestion has been made that even if all sister's estate is due to go to Mum, a Deed of Variation is used to bypass Mum, so I don't think this is unreasonable. Although there is some logic to just notifying everyone about Mum's death, and then letting it 'sit' while you sort sister's. 

Are there properties to sell? That might increase pressure to obtain probate, because without that you can't sell. 

OP, your sister's estate may come under a later question / money owed (long time since I had to deal with the forms). However, from what you've said, it sounds as if even if it all goes to Mum, you are still not in IHT zone. Making mistakes when you are IN or CLOSE to that zone matters. Making mistakes which aren't going to have any material effect on whether IHT is due really doesn't matter. 

beavere38

Thanks AnotherJoe My sister passed before mum did. I need to wait 2 months for a will search through Certainty before I can apply for a grant of administration to start sorting my sister's estate out and if there is no will found then mum inherits my sister's estate under the intestacy rules. Do I need to wait to resolve my sisters estate before I can start to sort out mum's estate?

beavere38

Savvy_sue there are two properties to sell. Mum had a warden controlled retirement flat (McCarthy and Stone) which she bought new for £95k. It is now worth £50k on a good day as we did not realise they halve in value and there is an annual service charge of about £2k plus you pay a percentage of the sale price when you sell it. Mum always said we should get rid of it quickly when she died. My sister had a house but it is in a very poor state of repair with roofs leaking and no lighting electrics due to the leaks. It is unmortgageable so I have to decide whether to renovate it or sell at auction to a cash buyer. I can only renovate it if I inherit some cash as I don't have the funds myself to do the work needed. I can pay off my sister's debts including the mortgage from her assets such as pensions etc but I am in limbo until the 56 day wait for the will search. 

Dox

beavere38 said:

I've started filling out the online form for the IHT estimate for my mum's estate. It has asked this:

These are any private pensions that XXXXX had. This does not include XXXXX’s state pension.

A private pension could be a personal pension or a pension from XXXXX’s employer.

• Did XXXXX have any private pensions?
  Yes
  Did XXXXX make any changes to their private pension in the 2 years before they died?
  
• Give an answer for did the deceased make any changes to a private pension in the 2 years before they died
• Value of remaining pension payments being paid to the estate

Mum had two pensions from a council she worked for and another that was originally dad's pension but was still paying out to her after he died. She was 89 and had been receiving pensions for many years. Will there be be any remaining pension payments being paid to the estate? I thought the pensions would just cease after death? Do I need to contact the various pension companies to ask for figures before I can complete this form? Thank you in advance.

Payments forming part of death estate [source: IHT Manual 17051 to 17056]

1. where the member's estate has a legal entitlement to have the value of the death benefit paid to it then the death benefit would form part of the member's estate. This would arise, for example, where a retirement annuity contract was held where the death benefits had not been assigned into a trust.
2. any outstanding guaranteed payments from an annuity that are payable to the estate or paid at the annuitants direction are included in the estate for IHT purposes (see IHT and annuities below).
3. any arrears of annuity payable to the member on death would also form part of their estate.

Point 1 doesn't apply (I've included it here for the benefit of anyone else with a similar query who reads the thread).

Points 2 and 3 do apply if there are outstanding instalments of pension still payable by the pension scheme(s). 

beavere38

I don't think I can use a deed of variation as my sister did not have a will. I will put nil for the pension question, the estate is well over £300k short of the £650k threshold so a couple of hundred quid won't make any difference if I am wrong. I will see if there is anywhere on the form to declare the value of the estate mum will inherit from my sister as I go through it.