How do I divide up my estate

Spendless

BooJewels said:

I recently claimed my late husbands assorted pensions and life insurance and had to fill in forms giving details of his family members and their ages etc. and tick whether they were financially dependent on the deceased.  Presumably to ensure that there was no family member left destitute and more worthy than myself, even though he nominated me and actually rang them all a month or so before he died to ensure the expression of wishes was in place.

That's interesting. We are in the process of sorting out our wills and  my husband mentioned to me today I am named as the beneficiary of his workplace pensions/life insurance. We have 2 children in their 20s. One is working f-time, rents privately and is about to get married, so I would say he his independent.

The other is looking to do a degree but hasn't been successful so far in getting on to the one she wishes to do. She currently studies in another part of the country on a course that will finish next month. Works very part time around her course earning NMW that she will need to give up when her course/student accommodation tenancy ends and  returns to living with us 200 miles away. Yes, she's an adult, but would she be classed as a dependent? 

Sarahspangles

I need to get round to updating the nominations on my two deferred LGPS pensions.  My two qualified as a dependent while they were aged under 23 and in full-time education or vocation training.  One did a foundation year and the other a placement year, so each took four years post A levels to graduate, and then turned 23.

For my NHS pension, the cut off point before which they may have been paid a children's pension was their 23rd birthday.

Marcon

CharlieC2210 said:

SevenOfNine said:

Flugelhorn said:

I think some of these are considered to be "outside the estate" if you nominate people on the pension / life insurance forms - that person should get the full amount subject  to the trustees agreeing and the money won't be part of the estate. expenses are covered from the rest of the estate 

"Should" correctly written in bold italics!  The trustees of a pension & death in service payment didn't automatically pay out to the nominated person the deceased had chosen on their form completed 3 years previously. The money was indeed "outside of the estate".

The trustees approached us first (as executors &, by default, estate beneficiaries, no will) & asked if there was anything we wanted taken into consideration. Clearly the door was somewhat open to 'not necessarily' complying with the deceased wishes! 

We all know from this forum how greed & other negative emotions can kick shockingly in when someone dies. I imagine there may be occasions when a disagreement arises & it all turns ugly & protracted, though not in our case but the trustees were talking about £273k & some people have families who aren't going to simply let that go, whatever the deceased wishes were at the time of nomination.

I hope this isn't intended to be a DiY will, because a solicitor is best placed to advise on achieving what you want to achieve &  avoiding any pitfalls.

Thanks. Who were the trustees of the pension? And why didn’t they automatically pay out to the nominated person? Why aren’t they legally bound to do so?  

 

The answer, as is so often the case, is: tax. Under current legislation, provided that any payment is respect of a death in service lump sum/pension is made at the discretion of the pension trustees (trustees of the will are nothing to do with deciding where the lump sum will be paid), it will be free of IHT. 

If the deceased was able to make a binding nomination, such that the lump sum had to be paid to particular recipients, it is potentially taxable. 

The trustees are either those named in the governing trust deed, or the managers/pension provider, depending on the structure of the scheme in question.

CharlieC2210 said:

SevenOfNine said:

What could have been taken into consideration?

 

All sorts of things - particularly any representations from those who believed they should be the chosen beneficiaries. In practice, it's pretty rare to deviate from a member's written instructions (usually included in what's called an Expression of Wish form, aka a Nomination form), but trustees still have to carry out due diligence.

Nothing to stop you saying you'd like any lump sums paid to your estate when you die, and your executors can then dish out the cash in accordance with your wishes. Provided that the payment is at the discretion of the pension trustees, the payment is not subject to IHT. That point is frequently misunderstood. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm17051 if you're keen on reading up on it.