Sipp And Wills

thebullsback

I'm 65 and wish to leave an equal share of my AJ Bell Sipp to 4 younger Nephews .
Should I do this through a Will I intend to get next week or could I simply fill in the Sipp beneficiary's form?

poseidon1

Definitely, the sipp beneficiary nomination form!

If you die between now and 2027, your nephews get the whole thing IHT free via the nomination.  If you stipulate the sipp trustees pay to your estate, to pass through to your nephews,   the sipp then becomes (unnecessarily) part of your estate and liable to IHT.

The proposed changes to the tax treatment of pensions for IHT purposes has not happened yet, so don't accelerate this change for your own sipp.

Marcon

poseidon1 said:

Definitely, the sipp beneficiary nomination form!

If you die between now and 2027, your nephews get the whole thing IHT free via the nomination.  If you stipulate the sipp trustees pay to your estate, to pass through to your nephews,   the sipp then becomes (unnecessarily) part of your estate and liable to IHT.

The proposed changes to the tax treatment of pensions for IHT purposes has not happened yet, so don't accelerate this change for your own sipp.

You can't stipulate that the SIPP must be paid to your estate any more than you can stipulate it is paid to your nephews. AJ Bell does not accept binding nominations. The whole point of an EOW form is that payment is then discretionary, which is why it can (currently) be paid free of IHT.

Provided the payment is made under discretion it can (currently) be paid to the estate and is not subject to IHT.

thebullsback

Does it make any difference if the Sipp is already in Flexi Drawdown?

poseidon1

Marcon said:

poseidon1 said:

Definitely, the sipp beneficiary nomination form!

If you die between now and 2027, your nephews get the whole thing IHT free via the nomination.  If you stipulate the sipp trustees pay to your estate, to pass through to your nephews,   the sipp then becomes (unnecessarily) part of your estate and liable to IHT.

The proposed changes to the tax treatment of pensions for IHT purposes has not happened yet, so don't accelerate this change for your own sipp.

You can't stipulate that the SIPP must be paid to your estate any more than you can stipulate it is paid to your nephews. AJ Bell does not accept binding nominations. The whole point of an EOW form is that payment is then discretionary, which is why it can (currently) be paid free of tax.

Provided the payment is made under discretion it can (currently) be paid to the estate and is not subject to IHT.

In general I would agree with you but there can be exceptions, please note the following extract from Ageon's technical note:

'' Scheme rules may alternatively (or additionally) allow the member to nominate, in writing, who they want to receive the lump sum death benefit. This request is legally binding on the scheme administrator or trustees. With these binding nominations, the lump sum death benefit will form part of the estate and therefore may be subject to IHT.''

We of course do not know the precise details of the OP's particular scheme rules. One would like to think the scheme trustees have complete discretion with no scope for binding nominations but we have no basis to be sure at this point.

Link to the complete Ageon technical note on this subject  below ( in case I have taken the extract out of context!):

https://www.aegon.co.uk/adviser/knowledge-centre/technical-zone/death-benefits/the-two-year-rule#:~:text=On a member's death before,of the member's death, or

Marcon

poseidon1 said:

Marcon said:

poseidon1 said:

Definitely, the sipp beneficiary nomination form!

If you die between now and 2027, your nephews get the whole thing IHT free via the nomination.  If you stipulate the sipp trustees pay to your estate, to pass through to your nephews,   the sipp then becomes (unnecessarily) part of your estate and liable to IHT.

The proposed changes to the tax treatment of pensions for IHT purposes has not happened yet, so don't accelerate this change for your own sipp.

You can't stipulate that the SIPP must be paid to your estate any more than you can stipulate it is paid to your nephews. AJ Bell does not accept binding nominations. The whole point of an EOW form is that payment is then discretionary, which is why it can (currently) be paid free of tax.

Provided the payment is made under discretion it can (currently) be paid to the estate and is not subject to IHT.

In general I would agree with you but there can be exceptions, please note the following extract from Ageon's technical note:

'' Scheme rules may alternatively (or additionally) allow the member to nominate, in writing, who they want to receive the lump sum death benefit. This request is legally binding on the scheme administrator or trustees. With these binding nominations, the lump sum death benefit will form part of the estate and therefore may be subject to IHT.''

We of course do not know the precise details of the OP's particular scheme rules. One would like to think the scheme trustees have complete discretion with no scope for binding nominations but we have no basis to be sure at this point.

Link to the complete Ageon technical note on this subject  below ( in case I have taken the extract out of context!):

https://www.aegon.co.uk/adviser/knowledge-centre/technical-zone/death-benefits/the-two-year-rule#:~:text=On a member's death before,of the member's death, or

Thank you.

We do know the details; it's an AJ Bell SIPP (see OP's first post) and I double checked AJ Bell's website before I answered. See the third page headed Expression of Wishes Guide:

https://www.ajbell.co.uk/sites/default/files/useful-forms/AJBYI_SIPP_nomination_and%20expression_of%20wishes_form.pdf