Do not need my SIPP

andy6247

Good afternoon, I am 77 years old and have not and will not draw on my SIPP that has a current fund value of £1.691m. Rather than on death and funds be distributed as per my wishes is there any way the fund can be split equally into pension funds for my two sons (no other children)?

Brie

I think the only thing that can happen is the fund be disinvested and the cash given to both if you have logged them both as your beneficiaries.  Best to mention it is a 50/50 split just so it's clear, assuming that's what you want.

tacpot12

On death, your pension will be split equally into pensions for your sons (if you have nominated them to receive your pension savings), but there's no way to do this ahead of your death. You can withdraw money from your SIPP and give it to your sons. There will no inheritance tax to pay as the gifts are from income. This might result in you paying more income tax, but the country could do with a bit more tax being paid at present. 

Brie

tacpot12 said:

On death, your pension will be split equally into pensions for your sons (if you have nominated them to receive your pension savings), but there's no way to do this ahead of your death. You can withdraw money from your SIPP and give it to your sons. There will no inheritance tax to pay as the gifts are from income. This might result in you paying more income tax, but the country could do with a bit more tax being paid at present. 

Isn't there something about the pension not being inheritable (is that a word?) if any of the SIPP has been accessed?  Or am I thinking of something else?  

Sorry if I got it wrong about it being able to remain as pensions.

Mark_d

Trying to split your pension wealth now will likely incur a lot of tax.  Why are you looking to divide your wealth before death?

andy6247

tacpot12 said:

On death, your pension will be split equally into pensions for your sons (if you have nominated them to receive your pension savings), but there's no way to do this ahead of your death. You can withdraw money from your SIPP and give it to your sons. There will no inheritance tax to pay as the gifts are from income. This might result in you paying more income tax, but the country could do with a bit more tax being paid at present. 

Many thanks for prompt reply. Would there be a tax liability of any sort if the fund was split equally to sons on my death?.  (PS pay lots and lots of tax as it is)

p00hsticks

Brie said:

tacpot12 said:

On death, your pension will be split equally into pensions for your sons (if you have nominated them to receive your pension savings), but there's no way to do this ahead of your death. You can withdraw money from your SIPP and give it to your sons. There will no inheritance tax to pay as the gifts are from income. This might result in you paying more income tax, but the country could do with a bit more tax being paid at present. 

Isn't there something about the pension not being inheritable (is that a word?) if any of the SIPP has been accessed?  Or am I thinking of something else?  

OP says that it hasn't been accessed and they have no intention of doing so.  

p00hsticks

andy6247 said:

tacpot12 said:

On death, your pension will be split equally into pensions for your sons (if you have nominated them to receive your pension savings), but there's no way to do this ahead of your death. You can withdraw money from your SIPP and give it to your sons. There will no inheritance tax to pay as the gifts are from income. This might result in you paying more income tax, but the country could do with a bit more tax being paid at present. 

Many thanks for prompt reply. Would there be a tax liability of any sort if the fund was split equally to sons on my death?.  (PS pay lots and lots of tax as it is)

My understanding is that as you are over 75 there would be tax to pay 
Tax on a private pension you inherit - GOV.UK (www.gov.uk) 

dunstonh

andy6247 said:

tacpot12 said:

On death, your pension will be split equally into pensions for your sons (if you have nominated them to receive your pension savings), but there's no way to do this ahead of your death. You can withdraw money from your SIPP and give it to your sons. There will no inheritance tax to pay as the gifts are from income. This might result in you paying more income tax, but the country could do with a bit more tax being paid at present. 

Many thanks for prompt reply. Would there be a tax liability of any sort if the fund was split equally to sons on my death?.  (PS pay lots and lots of tax as it is)

As things stand, there is no tax on them inheriting your pension.  And it doesn't form part of your estate value.

The beneficiaries inherit it as a pension.    They can draw on that pension if they wish and they will be taxed as income tax.

If you have never drawn the 25% TFC, then you can draw that now (subject to the maximum allowed) and gift it to them.   However, you need to be careful doing this as it would be a case of bring that 25% into your estate and the Gift being a transfer assessed under inheritance tax as a potentially exempt transfer (i.e. the 7 year rule).

Alternatively, you can gift out of income without tax issues.

What does your financial adviser say when you ask them about the various solutions open to you?

andy6247

Mark_d said:

Trying to split your pension wealth now will likely incur a lot of tax.  Why are you looking to divide your wealth before death?

I was looking to set up pensions for my two sons as I understood they would be liable for income tax on my fund on my death. Am I now right in thinking that on my death my fund could be split and transferred to sons without a tax liability?

Marcon

p00hsticks said:

Brie said:

tacpot12 said:

On death, your pension will be split equally into pensions for your sons (if you have nominated them to receive your pension savings), but there's no way to do this ahead of your death. You can withdraw money from your SIPP and give it to your sons. There will no inheritance tax to pay as the gifts are from income. This might result in you paying more income tax, but the country could do with a bit more tax being paid at present. 

Isn't there something about the pension not being inheritable (is that a word?) if any of the SIPP has been accessed?  Or am I thinking of something else?  

OP says that it hasn't been accessed and they have no intention of doing so.  

Doesn't matter if it has been accessed. Brie, I think you're recalling a recent podcast by Martin, which quite simply contained wrong information from Charlotte Jackson: https://forums.moneysavingexpert.com/discussion/comment/80893722#Comment_80893722?utm_source=community-search&utm_medium=organic-search&utm_term=charlotte+jackson