Non Contentious Request to change SIPP beneficiaries

Capricorn282

Hi,

My Mother In Law died last year amidst a complicated and sad family situation.

My In Laws divorced approx 10 years ago. My wife and her sister had a very difficult relationship with their  mother at the time, largely due to issues surrounding the divorce and my MIL's new partner. My MIL made a will naming her 4 grandchildren as equal beneficiaries, effectively disinheriting her 2 daughters. She changed her SIPP expression of wishes to say the same. 

Towards the end of her life my MIL's relationship with her daughters improved but they both remained very hostile to her partner right to the end. 

My MIL died last May, at which point her grandchildren were aged 17,16, 15 and 14. Her partner is named as executor in the will alongside a solicitor. The will states that the grandchildrens' inheritance will be held in discretionary trusts until they are 25. I'm not aware of any restrictions on the grandchildren receiving their share of my MIL's SIPP.

All of the beneficiaries agree (for now anyway!) that the will probably did not reflect my MIL's wishes at the end of her life and would like their Mum's to have some of their inheritance - but the situation is complicated as all were children when their granny died and 2 will still be children at the point the 2 year limit for changing the will by deed of variation. 

Emotions are obviously running high, but my wife and her sister are reluctantly coming to the conclusion that they have no grounds for challenging the will and can not use a deed of variation due to the age of the beneficiaries. 

We understand that the SIPP falls outside the estate and it will be passed on at the discretion of the SIPP trustees and think a compromise may be for the beneficiaries to request that the SIPP is passed to their parents rather than to themselves as the expression of wishes requests. 

Appreciate that noone can answer definitely without knowing the scheme roles and we need to approach the trustees directly with this proposal - but in principle could this work ? Could the beneficiaries do this in a staggered manner with each leaving their share unclaimed until their respective 18th birthdays when they can make the request as adults that their mother should receive their share in substitute to them ?

Any other ideas we haven't thought of as to how the grandchildren can gift some of their inheritance to their mum's - other than obviously waiting until their 25th birthdays?

Keep_pedalling

As none of the beneficiaries are adults the will cannot be varied through a deed of variation and I suspect the same applies to the pension. 

danco

I would have thought the SIPP could be changed. After all, any change there is at the discretion of the trustees, so they only need to be sure that even the youngest grandchild is mature enough to make a decision. Of course all I am saying is that they can legally decide, they might very well not even want to get into a decision.

doodling

Hi,

It isn't really clear to me why the trustees of the SIPP would choose to give the money to the sisters when their children have been nominated.  This is especially the case when the children are at, or approaching an age when they can choose for themselves to give that money to their parents if they want.

In order to convince they SIPP trustees, you would need to show that circumstances have changed significantly since the expression of wishes was made and I don't think that anything you have written really qualifies (but it is obviously down to the SIPP trustees to decide).

What is the problem with the money going to the children?  If, as you say, they want to give it to their parents then they can choose to do that once they reach 18 (which will be relatively soon).

It feels like you are trying to solve a problem that doesn't really exist, unless there are other factors you haven't mentioned.

Capricorn282

Thanks. 

My personal view is that I have no problem with the money going to the children - I actually think it's an ideal outcome. My wife and her sister think differently however ....

The children can't gift the money to their mothers when they're 18 as the will specifies that it will be held in a discretionary trust until they're 25.

I have some personal experience of being an executor and have used a deed of variation on one occasion - but have no experience of transfering a SIPP. I would like to think that if the grandchildren waited until they were 18 before claiming there share of the SIPP and then made an uncontested request to the executors to substitute an alternative beneficiary then the trustees would be likely to agree - particularly since the non-SIPP inheritance they received from the estate is substantial. But maybe that's wishful thinking. 

Capricorn282

edit - request to the SIPP trustees, not executor obviously!

Marcon

danco said:

I would have thought the SIPP could be changed. After all, any change there is at the discretion of the trustees, so they only need to be sure that even the youngest grandchild is mature enough to make a decision. Of course all I am saying is that they can legally decide, they might very well not even want to get into a decision.

'Only'... The chances of SIPP trustees overriding a valid expression of wish form, especially one which tallies with the will, when they are being asked to do so by children...forget it.

MIL had years in which to change both will and EOW form if she wanted to do so. This sounds like wishful/creative thinking on the part of two adults. Putting pressure on their offspring - which is what they're doing however much they will claim that they aren't - isn't the way forward.

Mind you, the partner might be listened to if they made representations and claimed they should receive some of the SIPP proceeds...

Capricorn282 said:

I would like to think that if the grandchildren waited until they were 18 before claiming there share of the SIPP and then made an uncontested request to the executors to substitute an alternative beneficiary then the trustees would be likely to agree - particularly since the non-SIPP inheritance they received from the estate is substantial. But maybe that's wishful thinking. 

The children don't claim their share; the SIPP trustees decide on the recipients. There are tax implications if the proceeds are not paid out or designated within two years of the death.

There are no minimum age restrictions to access an inherited pension. If the SIPP provider distributes the SIPP in accordance with the EOW, the grandchildren can access those funds (you've said above there are no restrictions imposed by the will). Whether it is correct for two adults to pressure them to do so, however subtly, and then hand over some loot to them, is quite another matter.

RAS

Capricorn282 said:

My MIL died last May, at which point her grandchildren were aged 17,16, 15 and 14. Her partner is named as executor in the will alongside a solicitor. The will states that the grandchildrens' inheritance will be held in discretionary trusts until they are 25. 

I'm going to assume that the executor solicitor is also a trustee of the discretionary trust and wrote the will?

Do the beneficiaries and the lay executor fully understand the conditions associated with a discretionary trust. And the fees that the solicitor can charge for their management of the trust?

A family member in a similar but different situation (they were to benefit from the discretionary trust during their life time and grandchildren to inherit the capital on death), discovered the trustee solicitor's fee exceeded their annual trust income and would deplete the capital if they lived very long, even without the tax issues.

It was incredibly difficult to unpick and was only achieved by a DOV in favour of the grandchildren.

Savvy_Sue

The ONLY reason I can think of for asking the SIPP to pay out to the parents is that it will then prove to be useful to the children while they remain children, but I'm not sure it would fly in any case. 

Are these trusts really set up until age 25? Some can be accessed at 18, even if it says 25 - depends on the precise kind of trust. 

BooJewels

When I got a pay out of my late husband's pension pot and life insurance, even though he'd filled in the expression of wishes form and rang them shortly before he died to ensure that all was in order, they sent me a form to complete, to list all his family members, their ages and whether or not they were financially dependent on him.

So, I suspect the trustees of the SIPP would only consider going against the expression of wishes if it could be proved that someone financially dependent was more worthy of the funds.

Capricorn282

Thanks Again.

I agree with the comments that the 2 daughters will be effectively pressuring their children to give up their inheritance - even if they convince each other that they aren't.

The chances of any goodwill from the partner are unfortunately slim to nil, with the 2 women having accused him of exerting undue influence on their mother to disinherit them out of spite. I tried to tell them not to ....