Nominate SIPP / will & IHT

caldi9

Good afternoon, has anyone nominated a Sipp for the sake of a will and how does that work? Is the beneficiary nominated with the Sipp provider and that’s it?
How does the iht work for a Sipp in case there is a nomination and in case there isn’t? Thank you

p00hsticks

You'd need to check with the provider, but pensions usually fall outside a persons estate - you nominate beneficiaries but it's up to the discretion of the trustees of the pension scheme to finally decide who gets the money. 

Although it's highly unlikely that they'd go against a persons wishes, there are circumstances where they might - for example if they had nominated a spouse many years ago and they have since divorced. 

If no nomination has been made then the pension provider will ask the executor to provide details of the closest living relatives and decide who si most entitled to the money. 

SIPPs and death | AJ Bell 

caldi9

p00hsticks said:

You'd need to check with the provider, but pensions usually fall outside a persons estate - you nominate beneficiaries but it's up to the discretion of the trustees of the pension scheme to finally decide who gets the money. 

Although it's highly unlikely that they'd go against a persons wishes, there are circumstances where they might - for example if they had nominated a spouse many years ago and they have since divorced. 

If no nomination has been made then the pension provider will ask the executor to provide details of the closest living relatives and decide who si most entitled to the money. 

SIPPs and death | AJ Bell 

Does it make an IHT difference whether the sipp is going to a trust or not? AJ bell show the option that the Sipp can be passed to a trust or individual.

Jeremy535897

caldi9 said:

p00hsticks said:

You'd need to check with the provider, but pensions usually fall outside a persons estate - you nominate beneficiaries but it's up to the discretion of the trustees of the pension scheme to finally decide who gets the money. 

Although it's highly unlikely that they'd go against a persons wishes, there are circumstances where they might - for example if they had nominated a spouse many years ago and they have since divorced. 

If no nomination has been made then the pension provider will ask the executor to provide details of the closest living relatives and decide who si most entitled to the money. 

SIPPs and death | AJ Bell 

Does it make an IHT difference whether the sipp is going to a trust or not? AJ bell show the option that the Sipp can be passed to a trust or individual.

There is no IHT charge, whoever the beneficiary is. Trusts give more future flexibility.

caldi9

Jeremy535897 said:

caldi9 said:

p00hsticks said:

You'd need to check with the provider, but pensions usually fall outside a persons estate - you nominate beneficiaries but it's up to the discretion of the trustees of the pension scheme to finally decide who gets the money. 

Although it's highly unlikely that they'd go against a persons wishes, there are circumstances where they might - for example if they had nominated a spouse many years ago and they have since divorced. 

If no nomination has been made then the pension provider will ask the executor to provide details of the closest living relatives and decide who si most entitled to the money. 

SIPPs and death | AJ Bell 

Does it make an IHT difference whether the sipp is going to a trust or not? AJ bell show the option that the Sipp can be passed to a trust or individual.

There is no IHT charge, whoever the beneficiary is. Trusts give more future flexibility.

Thanks, what sort of flexibility?

Albermarle

caldi9 said:

Jeremy535897 said:

caldi9 said:

p00hsticks said:

You'd need to check with the provider, but pensions usually fall outside a persons estate - you nominate beneficiaries but it's up to the discretion of the trustees of the pension scheme to finally decide who gets the money. 

Although it's highly unlikely that they'd go against a persons wishes, there are circumstances where they might - for example if they had nominated a spouse many years ago and they have since divorced. 

If no nomination has been made then the pension provider will ask the executor to provide details of the closest living relatives and decide who si most entitled to the money. 

SIPPs and death | AJ Bell 

Does it make an IHT difference whether the sipp is going to a trust or not? AJ bell show the option that the Sipp can be passed to a trust or individual.

There is no IHT charge, whoever the beneficiary is. Trusts give more future flexibility.

Thanks, what sort of flexibility?

I would also be interested in the answer. You often see comments to the opposite i.e. that trusts can complicate things and be costly to run. 

Jeremy535897

You never know the timing involved. A trust allows a choice of who to pick. You might have a situation where only young children are left to benefit, or where for whatever reason there is someone who might not have been identified as a main beneficiary, but circumstances change. It might be tax driven, where the benefits of a discretionary trust for inheritance tax might be worthwhile.

caldi9

Jeremy535897 said:

You never know the timing involved. A trust allows a choice of who to pick. You might have a situation where only young children are left to benefit, or where for whatever reason there is someone who might not have been identified as a main beneficiary, but circumstances change. It might be tax driven, where the benefits of a discretionary trust for inheritance tax might be worthwhile.

But one can change the nomination at any time?
or is the main difference that if a trust is nominated there isn’t any IHT opposed to when an individual is nominated?

Albermarle

caldi9 said:

Jeremy535897 said:

You never know the timing involved. A trust allows a choice of who to pick. You might have a situation where only young children are left to benefit, or where for whatever reason there is someone who might not have been identified as a main beneficiary, but circumstances change. It might be tax driven, where the benefits of a discretionary trust for inheritance tax might be worthwhile.

But one can change the nomination at any time?
or is the main difference that if a trust is nominated there isn’t any IHT opposed to when an individual is nominated?

A DC pension pot is not taken into account when calculating IHT on an estate, whoever the beneficiary is.

There have been some political mutterings about this recently, as wealthier people who have other income/assets can just use those, and never take any income from the pension. The LTA being abolished has meant that more IHT can be avoided this way - hence more speculation it might be restricted at some point.

Jeremy535897

caldi9 said:

Jeremy535897 said:

You never know the timing involved. A trust allows a choice of who to pick. You might have a situation where only young children are left to benefit, or where for whatever reason there is someone who might not have been identified as a main beneficiary, but circumstances change. It might be tax driven, where the benefits of a discretionary trust for inheritance tax might be worthwhile.

But one can change the nomination at any time?
or is the main difference that if a trust is nominated there isn’t any IHT opposed to when an individual is nominated?

Some information here:https://techzone.abrdn.com/public/pensions/death-benefit-nominations

https://adviser.royallondon.com/technical-central/pensions/death-benefits/death-benefits-discretion-or-direction/