SIPP Beneficiaries being Challenged

tiredandtested1

I am writing for honest advice regarding a SIPP that has been left to me and my sister by our late father, who died suddenly and unexpectedly in May 2020.

Dad claimed to have written a Will, but we have exhausted all avenues and never found it. All we have is his non legally binding ‘expression of wish’ form with his SIPP provider, which names me and my sister as beneficiaries. He nominated us in 2013 and reconfirmed this in late 2019.

Dad was midway through a bitter and acrimonious divorce with my stepmum, his second wife. No children together, she has a daughter from a previous marriage who is 21.

It is complex, but I will try and summarise our situation. 

1.  Under intestacy rules, our stepmother has inherited his estate (£85k), a share of a family property (£80k) a beachhut that was in joint names (she sold it just before Christmas - £100k).
2. She is mortgage free after Dad made significant contributions during the marriage (£200k) and he paid all bills. House is worth circa £650k. Dad was never put on paperwork.
3. Stepmother has an income from a small rental property.
4. She automatically inherits 2 widow’s pensions of Dad’s from other providers
5. She can no longer work due to alcoholism (has been sober 1.5 years with no relapses, but she is in receipt of a personal independence payment £650 per month and has various ongoing health issues. She is 58.
6. She has her own private pension. 
   

My stepmother is challenging our receipt of this SIPP and said she was dependent on Dad and should be provided for after his death (the entire estate not enough for her apparently).

Since August, I have written 6 letters to the pension company after they have asked for more and more information each time. I’ve been dealing with communication with them myself. 

My stepmother on the other hand has a shrewd and ruthless solicitor acting for her. They have excluded me and my sister from the administration of our late father’s affairs and refused to let us see estate accounts etc. We had a very close relationship to Dad and this has been a heart-breaking, living nightmare.

Stepmother’s solicitor is claiming a) My stepmother and her daughter are dependents who should be provided for by Dad’s SIPP and b) stepmother was due to get half the SIPP in the divorce (this hadn't been agreed, negotiations were at draft stage). 

This has been going on for months and months now. I am sick with worry that the expression of wish (EoW) form is going to be disregarded, and they’re going to award her a percentage of the SIPP. 

The pension company administrators keep telling me the EoW form isn’t a legally binding document and trustees decide who gets the SIPP. It isn’t what Dad wanted. He would be horrified to think that me and my sister, and in turn our young families, will not inherit from his estate and lose a percentage of the SIPP. It is valued around £400k. My sister and I both have mortgages and considerable outgoings.

I’m not confident in the processes of the pension company and have no idea what “the other side” has said to them. Will they do due diligence to check out her story? No one has fact checked mine or asked for proof of anything.

Those of you that have read this far (thank you), do you think it is likely that when the final decision is made, my sister and I are going to lose out? Should we appeal and to whom if they go against us? I need this chapter of my life to be over, it is incredibly stressful. I have three young children and with the lockdown as well, I am approaching breaking point.

Any words of advice welcome.  

Marcon

Nobody here can guess what the outcome will be, so there's no point speculating.  

Proper, informed help is at hand - free, impartial and expert: https://www.pensionsadvisoryservice.org.uk. Start there and they'll be able to help (but again, they won't be able to guess what will happen).

If you don't like the SIPP provider's decision, you can appeal to the Pensions Ombudsman - but your starting point, for now, is TPAS.

tacpot12

Your father's expression of wish was non-binding and he knew this. It is an unfortunately feature of the trust legislation that allows pension money to pass outside of the estate. (And you really want this money not to pass through the estate now). 
The downside is that anyone can make a case to the trustees that they were a dependent of the person who has died.

The Trustees will mainly be concerned about avoiding being sued by your step-mum. I think you should ensure that the Trustees know that your step-mum has been adequately (more than adequately I would say), and remind them that he reconfirmed his nomination in 2019 (which is very recently). I think you should make sure that the Trustees are aware that you are equally likely to sue them if they don't adhere to your father's expression of wishes. (You need to make it clear that you are well financed even if this might be stretching the truth.)

In the absence of any other suggestion from yourself, I think the Trustees tend to err towards the view the the divorce would have resulted in some of the SIPP being transferred to your step-mum. I think you need to counter this suggestion by pointing out that IF the divorce had split the matrimonial assets equally, your step-mother would not have received half of the SIPP, because she had her own pension, and had your father received half the matrimonial assets then you and your sister would have inherited half of the substantial assets instead of receiving nothing. This is I think the point that the decision will turn on, and I think your step-mum will have an up hill battle convincing any court that she has not been very well provided for already. 

The only way to avoid the trustees making a decision that you don't like is to agree a settlement with your step-mum and take this to the trustees. They will jump at any easy way out of this issue. 

Marcon

tacpot12 said:

Your father's expression of wish was non-binding and he knew this. It is an unfortunately feature of the trust legislation that allows pension money to pass outside of the estate. (And you really want this money not to pass through the estate now). 
The downside is that anyone can make a case to the trustees that they were a dependent of the person who has died.

The Trustees will mainly be concerned about avoiding being sued by your step-mum. I think you should ensure that the Trustees know that your step-mum has been adequately (more than adequately I would say), and remind them that he reconfirmed his nomination in 2019 (which is very recently). I think you should make sure that the Trustees are aware that you are equally likely to sue them if they don't adhere to your father's expression of wishes. (You need to make it clear that you are well financed even if this might be stretching the truth.)

In the absence of any other suggestion from yourself, I think the Trustees tend to err towards the view the the divorce would have resulted in some of the SIPP being transferred to your step-mum. I think you need to counter this suggestion by pointing out that IF the divorce had split the matrimonial assets equally, your step-mother would not have received half of the SIPP, because she had her own pension, and had your father received half the matrimonial assets then you and your sister would have inherited half of the substantial assets instead of receiving nothing. This is I think the point that the decision will turn on, and I think your step-mum will have an up hill battle convincing any court that she has not been very well provided for already. 

The only way to avoid the trustees making a decision that you don't like is to agree a settlement with your step-mum and take this to the trustees. They will jump at any easy way out of this issue. 

All this talk of suing is nonsense and the SIPP trustees will know that. It simply shows a failure to understand the best (free) route for unhappy survivors: the Pensions Ombudsman.

Thrugelmir

Rather than rake over your step mothers personal finances which isn't going to help the broader situation. You need to have a calm and considered discussion with your sister. As the way forward to compromise with your step mother.  A 50/50 split is the obvious settlement. Your father didn't finalise the divorce which unfortunately leaves the power with your step mother.  Once probate is complete then the estate details will be published including the final accounts. 

tiredandtested1

Thank you to Marcon, Thrugelmir and tacpot12 for taking the time to read and advise on my very long post. 

You’re right that speculating isn’t going to change any outcomes, but it does help me to hear people’s thoughts. 

Suing the Trustees will be right up my stepmother’s street, as her goal is to make things as difficult and expensive for all concerned. We aren’t going to be suggesting settling with her while she’s inheriting his estate and numerous jointly held assets. 

I will contact tpas and go to the Ombudsman depending on the final outcome. 

Happy to hear further views or experiences with this kind of matter. 

Thanks.

WYSPECIAL

There isn’t really much you can do other than negotiate with your step mum and pass this onto them or wait for the SIPP provider to make a decision,

Your dad would have known the expression of wishes wasn’t binding and was free to make a Will if he wished to do so.

Learn from it yourself. Make a Will, lodge it properly and let people know where to find it.

Thrugelmir

tiredandtested1 said:

I will contact tpas and go to the Ombudsman depending on the final outcome. 

They are not going to arbitrate in a family dispute not their role. An expression of wish is not legally binding. 

tiredandtested1

WYSPECIAL said:

There isn’t really much you can do other than negotiate with your step mum and pass this onto them or wait for the SIPP provider to make a decision,

Your dad would have known the expression of wishes wasn’t binding and was free to make a Will if he wished to do so.

Learn from it yourself. Make a Will, lodge it properly and let people know where to find it.

Definitely! I have made a Will. I would never want to cause my children the heartache and stress of this situation. My Dad has let us down and left us exposed to this. Reading your views helps me make peace with the decision I think the trustees are going to make. I feel like it’s out of my hands and Dad created this situation by marrying someone who would never sit back and let his children have what he wanted them to have. They were only married 10 years. He would never have taken money from her daughter if the situation had been reversed (and this was nearly the case prior to her rehabilitation). 

tiredandtested1

Thrugelmir said:

tiredandtested1 said:

I will contact tpas and go to the Ombudsman depending on the final outcome. 

They are not going to arbitrate in a family dispute not their role. An expression of wish is not legally binding. 

I think you are right (sadly). It’s like an episode of Jeremy Kyle. If Dad had wanted to pass his assets securely he should have thought of something other than his SIPP. If only I had known this about the product when he sat me and my sister down last autumn and told us he had reconfirmed that we would receive this money in the event of his death.

Suseka97

You've had a lot of good advice already, and I have no experience of such matters - but I note that whilst your step-mother has legal representation helping her, you do not.  Have you considered speaking with a solicitor who deals with family law. probate matters to see whether you have any legal standing with regards to the wider estate?   If you were able to have a short/free consultation it might be beneficial or at least help you come to terms with the situation.  Just a thought.