Civil Service AVCs death benefit nomination

Traveller37

I retired 20 years ago with a Civil Service pension and some AVCs.  I have taken 25% of the AVCs tax free but the rest remains invested with Standard Life and Scottish Widows.  The CSAVC scheme was taken over by Legal and General in 2018.

My wife is currently nominated to receive the benefits if I die before her, and that would mean paying inheritance tax on the sum when she dies.  If I nominate my daughter instead would It escape inheritance tax?  Are there any financial advisors who specialise in Civil Service AVCs?  How would I find one?

NedS

Pensions are outside of your estate and as such are not subject to inheritance tax.

Marcon

NedS said:

Pensions are outside of your estate and as such are not subject to inheritance tax.

They can be paid to your estate on death and still not be subject to inheritance tax, provided that payment is at the discretion of the trustees (or, in the case of the CS scheme, the managers).

dunstonh

My wife is currently nominated to receive the benefits if I die before her, and that would mean paying inheritance tax on the sum when she dies.  If I nominate my daughter instead would It escape inheritance tax?

You can nominate your daughter and it wont form part of your wife's estate.   You may just want to add a note to the nomination that your wife has sufficient funds and you would prefer your daughter to receive it (just so the trustees understand your reasoning - don't mention it is to avoid future IHT).

Is IHT on second death a possibility? (you can potentially get to £1m nowadays without IHT)

Flugelhorn

This is something I was looking at - aware that the pension pot was outside the estate but once one of a couple died the inherited pot became part of the second of the couple's estate - presume by nominating the children instead we can skip the bit where it belongs to the survivor of the couple

Traveller37

Very grateful for all the comments, very helpful.

Our Victorian house in SE London (bought in 1973) has increased in value to a silly amount and will take up all of our joint 1 million free of inheritance tax.  My CSAVCs are split between Standard Life and Scottish Widows.  Today I contacted Scottish Widows and they are sending me a form to nominate our daughter.  Will do the same with Standard Life on Monday.  I will certainly do what dunstonh suggested.  Thanks again. 

Traveller37

Been doing some more digging and it seems that daughter will have to pay tax on the money.  If that is correct it could push her into the 40% bracket so the taxman wins whatever I do!

Albermarle

Flugelhorn said:

This is something I was looking at - aware that the pension pot was outside the estate but once one of a couple died the inherited pot became part of the second of the couple's estate - presume by nominating the children instead we can skip the bit where it belongs to the survivor of the couple

I thought the survivor of the couple would still have the pension held in trust, if they opted for beneficiary drawdown,  and therefore would not form part of their estate when they died. They could then nominate the children as beneficiaries .

Obviously if the beneficiary opted to take the pot as a lump sum, then it would go into their estate. 

That is my limited understanding anyway.