Drawdown pension inheritance

Pippa12345

If a parent with a drawdown pension dies, do the adult children have to pay tax on their share of this pension pot inheritance? It's nowhere near probate amounts. 
Thanks. 

Pablo7474

Depends on whether the parent dies before or after age 75. If before, no, if after it is taxable as income when they withdraw it. Both cases IHT not applicable. 

Albermarle

Of course the children should be registered as potential beneficiaries with the pension provider via an Expression of Wish form.
The pension should not be mentioned in any will.

gee9fam

Albermarle said:

The pension should not be mentioned in any will.

Can you clarify why the pension should not be mentioned please? I have lines in mine stating that Pension/Sipp should be split evenly between my 2 children for clarification, i.e. I leave  "one half of the benefit of any Pension or SIPP held in my name to child 1 / child 2".

Should this be removed?

Expression of Wish forms have been completed with pension/Sipp providers. Fairly basic will with a cash sum up to the IHT allowance split between the 2 children and rest of the estate to spouse. Identical will for myself/spouse

MEM62

gee9fam said:

Albermarle said:

The pension should not be mentioned in any will.

Can you clarify why the pension should not be mentioned please? 

Pensions generally fall outside of your estate.  Any decision with respect to where the money goes after your demise will be made by the trustees - although you may register an Expression of Wishes. Pension trustees are not bound by the contents of your will.    

gee9fam

MEM62 said:

gee9fam said:

Albermarle said:

The pension should not be mentioned in any will.

Can you clarify why the pension should not be mentioned please? 

Pensions generally fall outside of your estate.  Any decision with respect to where the money goes after your demise will be made by the trustees - although you may register an Expression of Wishes. Pension trustees are not bound by the contents of your will.    

Yes, appreciate that but was a little concerned by the use of "should not" as to whether this caused some IHT/Tax implication that I wasn't aware of. I have included the line in the will to remind the Executors to remind the pension trustess that was my intention. Hopefully, it will not do any harm. If so, I would need to remove it.

Albermarle

Your will defines how you want your estate to be distributed . Your pension pot is not part of your estate so should really not be included.
I suppose including it is not going to cause a  big issue and probably many people do without realising the trustee status of the pension pot. I would just check in advance that the executors fully understand, and do not get confused and add the pension pot figures into the estate by accident.

gee9fam

Good point about pension pot figures not beeing added by mistake into the estate forms. I'd be back to haunt them if they did! Thankfully, one child is a Solicitor so hopefully will research thoroughly prior to completing the forms.

AlanP_2

gee9fam said:

Good point about pension pot figures not beeing added by mistake into the estate forms. I'd be back to haunt them if they did! Thankfully, one child is a Solicitor so hopefully will research thoroughly prior to completing the forms.

Given their profession you might get a more definitive answer from them as opposed to "interested laypeople" on the internet.

gee9fam

AlanP_2 said:

gee9fam said:

Good point about pension pot figures not beeing added by mistake into the estate forms. I'd be back to haunt them if they did! Thankfully, one child is a Solicitor so hopefully will research thoroughly prior to completing the forms.

Given their profession you might get a more definitive answer from them as opposed to "interested laypeople" on the internet.

Got to admit I find the comments from the "interested laypeople" very insightful and thought provoking at times. Hence my query above. I will bounce it off my daughter although she works mainly in corporate law so not much good unless i want to mount a hostile bid against another company. She also tells me regularly I can't afford her fees.

theblueflash

gee9fam said:

AlanP_2 said:

gee9fam said:

Good point about pension pot figures not beeing added by mistake into the estate forms. I'd be back to haunt them if they did! Thankfully, one child is a Solicitor so hopefully will research thoroughly prior to completing the forms.

Given their profession you might get a more definitive answer from them as opposed to "interested laypeople" on the internet.

Got to admit I find the comments from the "interested laypeople" very insightful and thought provoking at times. Hence my query above. I will bounce it off my daughter although she works mainly in corporate law so not much good unless i want to mount a hostile bid against another company. She also tells me regularly I can't afford her fees.

Thanks @gee9fam that made me laugh and at the same time want to go and drag The Boy kicking and screaming off his PlayStation - no more Fortnite for you Boy! - Corporate Law is where you need to be 🤣