pension cashing out

brehom5

Linton said:

brehom5 said:

Linton said:

brehom5 said:

in the UK, please can someone confirm if this method is correct if parent has a untouched pension pot that needs passing to an offspring

example:

73 years old, untouched pension amount total 60k

This needs going to offspring as gift

Withdraw 25% tax free, transfer straight to offspring

withdrawn 75% which is taxable, transfer straight to offspring

Is there any other way to cash in on this to reduce the 75% tax, and as it will be gifted, should offspring be aware of any tax implications or the parent gifting it e.g. if using it to buy a home or any other investment?

Also if theres an alternative method which makes more sense e.g. cash out 25% tax free but then set the offspring as a beneficiary, and the offspring withdraws it after that?

Any advice appreciated

Withdrawing the money from the pension paying the tax then gifting it is the only way to do what you want whilst the parent is alive. 

Some points:
1) Best to make the withdrawals over 2 years if an extra £45K income in a single tax year would put the parent into the higher rate tax band.

2) Making the gift could cause problems if the parent is expecting the local council to pay for future care needs or becomes bankrupt or dies leaving insufficient money to pay any debts.

3) If the parent dies within 7 years the gift would still form part of their estate for tax purposes and could therefore potentially give rise to extra inheritance tax.

appreciate them points as theres a lot to understand on this.

1. So in a scenario, currently living on main pension with a small income, withdraw maximum amount, pay the tax on it but don't make sure total income plus pension withdrawal doesn't push it to the next tax band (excluding the 25% amount as that is classed as separate), is that correct, and does the pension company deduct tax on withdrawal?

2. and what are the problems that can arise on point 2 other than hoping the council can sufficiently cover the living costs? if current income covers everything is that problem covered? just so I get the worst case scenarios

3. thanks and also if that scenario happens, is it correct there is a 3k tax free gift limit which can be deducted from whatever is gifted in both the 2 years split, to slightly reduce that tax bill so the 25% works out tax free, plus potentially 6k of the remainder as that is gifted (and potentially last years as no gift last year, this year can be 6k, and next year 3k tax free cash gift)

1) Yes the pension company will deduct income tax prior to paying out the money.  However they will deduct more tax than expected as this will be the first ever payment in a completely new income stream. This extra tax will need to be reclaimed from HMRC.  There is an ongoing thread on this matter.

https://forums.moneysavingexpert.com/discussion/6582585/how-does-emergency-tax-work#latest

2) Deprivation of Assets.  If the council believe the parent has impoverished themselves in order to get their care paid by the state they can calculate the care payments due assuming that the parent still has the money. If the parent has more than enough to pay for care costs themselves there is no problem.

On bankruptcy the creditors could ask the courts to undo the gift.

3)  No, the £3K tax free gifting is only relevent to subsequent inheritance tax after death if the parent dies within 7 years.  It does not affect the income tax due on withdrawals.

PS possibly misunderstood your question..  The £3K gift allowance could help reduce IHT if parent dies within 7 years of making the gift.

thank you all very helpful as this is for someone with 0 knowledge and not wanting to withdraw then realise could have waited a few months e.g. after april to take remainders out to save x amount

So just to clarify this is the best way forward now that we have the rules:

1. Withdraw the 25% tax free amount as soon as possible, then transfer to offspring (offsprings income is irrelevant as its a gifted cash)

2. Workout full taxable income of the parent, then withdraw remainder of the balance split over 1-3 years by End of March this year, then April going forward, to make sure don't then raise the total income into the next tax bracket e.g. 50K if 20% (and again offsprings income is irrelevant on these amounts as well as its a gifted cash).

3. Just bear in mind if there is a death within 7 years, the 75% amount is then taxable as part of the estate, minus the 3k a year allowance, once the 7 years has passed, the transfer is clear of any tax risks

If that is correct, very simple now that you guys have explained clearly, does that plan sound correct, and thanks in advance. Any additional points just to bear in mind please do share its very helpful to pass this on to family and friends.

Dazed_and_C0nfused

brehom5 said:

Linton said:

brehom5 said:

Linton said:

brehom5 said:

in the UK, please can someone confirm if this method is correct if parent has a untouched pension pot that needs passing to an offspring

example:

73 years old, untouched pension amount total 60k

This needs going to offspring as gift

Withdraw 25% tax free, transfer straight to offspring

withdrawn 75% which is taxable, transfer straight to offspring

Is there any other way to cash in on this to reduce the 75% tax, and as it will be gifted, should offspring be aware of any tax implications or the parent gifting it e.g. if using it to buy a home or any other investment?

Also if theres an alternative method which makes more sense e.g. cash out 25% tax free but then set the offspring as a beneficiary, and the offspring withdraws it after that?

Any advice appreciated

Withdrawing the money from the pension paying the tax then gifting it is the only way to do what you want whilst the parent is alive. 

Some points:
1) Best to make the withdrawals over 2 years if an extra £45K income in a single tax year would put the parent into the higher rate tax band.

2) Making the gift could cause problems if the parent is expecting the local council to pay for future care needs or becomes bankrupt or dies leaving insufficient money to pay any debts.

3) If the parent dies within 7 years the gift would still form part of their estate for tax purposes and could therefore potentially give rise to extra inheritance tax.

appreciate them points as theres a lot to understand on this.

1. So in a scenario, currently living on main pension with a small income, withdraw maximum amount, pay the tax on it but don't make sure total income plus pension withdrawal doesn't push it to the next tax band (excluding the 25% amount as that is classed as separate), is that correct, and does the pension company deduct tax on withdrawal?

2. and what are the problems that can arise on point 2 other than hoping the council can sufficiently cover the living costs? if current income covers everything is that problem covered? just so I get the worst case scenarios

3. thanks and also if that scenario happens, is it correct there is a 3k tax free gift limit which can be deducted from whatever is gifted in both the 2 years split, to slightly reduce that tax bill so the 25% works out tax free, plus potentially 6k of the remainder as that is gifted (and potentially last years as no gift last year, this year can be 6k, and next year 3k tax free cash gift)

1) Yes the pension company will deduct income tax prior to paying out the money.  However they will deduct more tax than expected as this will be the first ever payment in a completely new income stream. This extra tax will need to be reclaimed from HMRC.  There is an ongoing thread on this matter.

https://forums.moneysavingexpert.com/discussion/6582585/how-does-emergency-tax-work#latest

2) Deprivation of Assets.  If the council believe the parent has impoverished themselves in order to get their care paid by the state they can calculate the care payments due assuming that the parent still has the money. If the parent has more than enough to pay for care costs themselves there is no problem.

On bankruptcy the creditors could ask the courts to undo the gift.

3)  No, the £3K tax free gifting is only relevent to subsequent inheritance tax after death if the parent dies within 7 years.  It does not affect the income tax due on withdrawals.

PS possibly misunderstood your question..  The £3K gift allowance could help reduce IHT if parent dies within 7 years of making the gift.

thank you all very helpful as this is for someone with 0 knowledge and not wanting to withdraw then realise could have waited a few months e.g. after april to take remainders out to save x amount

So just to clarify this is the best way forward now that we have the rules:

1. Withdraw the 25% tax free amount as soon as possible, then transfer to offspring (offsprings income is irrelevant as its a gifted cash)

2. Workout full taxable income of the parent, then withdraw remainder of the balance split over 1-3 years by End of March this year, then April going forward, to make sure don't then raise the total income into the next tax bracket e.g. 50K if 20% (and again offsprings income is irrelevant on these amounts as well as its a gifted cash).

3. Just bear in mind if there is a death within 7 years, the 75% amount is then taxable as part of the estate, minus the 3k a year allowance, once the 7 years has passed, the transfer is clear of any tax risks

If that is correct, very simple now that you guys have explained clearly, does that plan sound correct, and thanks in advance. Any additional points just to bear in mind please do share its very helpful to pass this on to family and friends.

Re point 2.  One risk with taking the money so early in the tax year (after 5 April) is that your other taxable income situation could change over the corse of the rest of the tax year and you end up having more taxable income than expected.

And as a result you move into higher rate territory.

brehom5

Dazed_and_C0nfused said:

brehom5 said:

Linton said:

brehom5 said:

Linton said:

brehom5 said:

in the UK, please can someone confirm if this method is correct if parent has a untouched pension pot that needs passing to an offspring

example:

73 years old, untouched pension amount total 60k

This needs going to offspring as gift

Withdraw 25% tax free, transfer straight to offspring

withdrawn 75% which is taxable, transfer straight to offspring

Is there any other way to cash in on this to reduce the 75% tax, and as it will be gifted, should offspring be aware of any tax implications or the parent gifting it e.g. if using it to buy a home or any other investment?

Also if theres an alternative method which makes more sense e.g. cash out 25% tax free but then set the offspring as a beneficiary, and the offspring withdraws it after that?

Any advice appreciated

Withdrawing the money from the pension paying the tax then gifting it is the only way to do what you want whilst the parent is alive. 

Some points:
1) Best to make the withdrawals over 2 years if an extra £45K income in a single tax year would put the parent into the higher rate tax band.

2) Making the gift could cause problems if the parent is expecting the local council to pay for future care needs or becomes bankrupt or dies leaving insufficient money to pay any debts.

3) If the parent dies within 7 years the gift would still form part of their estate for tax purposes and could therefore potentially give rise to extra inheritance tax.

appreciate them points as theres a lot to understand on this.

1. So in a scenario, currently living on main pension with a small income, withdraw maximum amount, pay the tax on it but don't make sure total income plus pension withdrawal doesn't push it to the next tax band (excluding the 25% amount as that is classed as separate), is that correct, and does the pension company deduct tax on withdrawal?

2. and what are the problems that can arise on point 2 other than hoping the council can sufficiently cover the living costs? if current income covers everything is that problem covered? just so I get the worst case scenarios

3. thanks and also if that scenario happens, is it correct there is a 3k tax free gift limit which can be deducted from whatever is gifted in both the 2 years split, to slightly reduce that tax bill so the 25% works out tax free, plus potentially 6k of the remainder as that is gifted (and potentially last years as no gift last year, this year can be 6k, and next year 3k tax free cash gift)

1) Yes the pension company will deduct income tax prior to paying out the money.  However they will deduct more tax than expected as this will be the first ever payment in a completely new income stream. This extra tax will need to be reclaimed from HMRC.  There is an ongoing thread on this matter.

https://forums.moneysavingexpert.com/discussion/6582585/how-does-emergency-tax-work#latest

2) Deprivation of Assets.  If the council believe the parent has impoverished themselves in order to get their care paid by the state they can calculate the care payments due assuming that the parent still has the money. If the parent has more than enough to pay for care costs themselves there is no problem.

On bankruptcy the creditors could ask the courts to undo the gift.

3)  No, the £3K tax free gifting is only relevent to subsequent inheritance tax after death if the parent dies within 7 years.  It does not affect the income tax due on withdrawals.

PS possibly misunderstood your question..  The £3K gift allowance could help reduce IHT if parent dies within 7 years of making the gift.

thank you all very helpful as this is for someone with 0 knowledge and not wanting to withdraw then realise could have waited a few months e.g. after april to take remainders out to save x amount

So just to clarify this is the best way forward now that we have the rules:

1. Withdraw the 25% tax free amount as soon as possible, then transfer to offspring (offsprings income is irrelevant as its a gifted cash)

2. Workout full taxable income of the parent, then withdraw remainder of the balance split over 1-3 years by End of March this year, then April going forward, to make sure don't then raise the total income into the next tax bracket e.g. 50K if 20% (and again offsprings income is irrelevant on these amounts as well as its a gifted cash).

3. Just bear in mind if there is a death within 7 years, the 75% amount is then taxable as part of the estate, minus the 3k a year allowance, once the 7 years has passed, the transfer is clear of any tax risks

If that is correct, very simple now that you guys have explained clearly, does that plan sound correct, and thanks in advance. Any additional points just to bear in mind please do share its very helpful to pass this on to family and friends.

Re point 2.  One risk with taking the money so early in the tax year (after 5 April) is that your other taxable income situation could change over the corse of the rest of the tax year and you end up having more taxable income than expected.

And as a result you move into higher rate territory.

thanks so the £3000 yearly gift limit is basically only a limit that if the gifter dies within 7 years, that amount is tax free, and anything gifted above 3000 is then taxable as part of the estate. But anyone can gift as much as they want even 1 million pounds and if the gifter gets over the 7 years that amount is now clear of tax risks?

brehom5

brehom5 said:

Linton said:

brehom5 said:

Linton said:

brehom5 said:

in the UK, please can someone confirm if this method is correct if parent has a untouched pension pot that needs passing to an offspring

example:

73 years old, untouched pension amount total 60k

This needs going to offspring as gift

Withdraw 25% tax free, transfer straight to offspring

withdrawn 75% which is taxable, transfer straight to offspring

Is there any other way to cash in on this to reduce the 75% tax, and as it will be gifted, should offspring be aware of any tax implications or the parent gifting it e.g. if using it to buy a home or any other investment?

Also if theres an alternative method which makes more sense e.g. cash out 25% tax free but then set the offspring as a beneficiary, and the offspring withdraws it after that?

Any advice appreciated

Withdrawing the money from the pension paying the tax then gifting it is the only way to do what you want whilst the parent is alive. 

Some points:
1) Best to make the withdrawals over 2 years if an extra £45K income in a single tax year would put the parent into the higher rate tax band.

2) Making the gift could cause problems if the parent is expecting the local council to pay for future care needs or becomes bankrupt or dies leaving insufficient money to pay any debts.

3) If the parent dies within 7 years the gift would still form part of their estate for tax purposes and could therefore potentially give rise to extra inheritance tax.

appreciate them points as theres a lot to understand on this.

1. So in a scenario, currently living on main pension with a small income, withdraw maximum amount, pay the tax on it but don't make sure total income plus pension withdrawal doesn't push it to the next tax band (excluding the 25% amount as that is classed as separate), is that correct, and does the pension company deduct tax on withdrawal?

2. and what are the problems that can arise on point 2 other than hoping the council can sufficiently cover the living costs? if current income covers everything is that problem covered? just so I get the worst case scenarios

3. thanks and also if that scenario happens, is it correct there is a 3k tax free gift limit which can be deducted from whatever is gifted in both the 2 years split, to slightly reduce that tax bill so the 25% works out tax free, plus potentially 6k of the remainder as that is gifted (and potentially last years as no gift last year, this year can be 6k, and next year 3k tax free cash gift)

1) Yes the pension company will deduct income tax prior to paying out the money.  However they will deduct more tax than expected as this will be the first ever payment in a completely new income stream. This extra tax will need to be reclaimed from HMRC.  There is an ongoing thread on this matter.

https://forums.moneysavingexpert.com/discussion/6582585/how-does-emergency-tax-work#latest

2) Deprivation of Assets.  If the council believe the parent has impoverished themselves in order to get their care paid by the state they can calculate the care payments due assuming that the parent still has the money. If the parent has more than enough to pay for care costs themselves there is no problem.

On bankruptcy the creditors could ask the courts to undo the gift.

3)  No, the £3K tax free gifting is only relevent to subsequent inheritance tax after death if the parent dies within 7 years.  It does not affect the income tax due on withdrawals.

PS possibly misunderstood your question..  The £3K gift allowance could help reduce IHT if parent dies within 7 years of making the gift.

thank you all very helpful as this is for someone with 0 knowledge and not wanting to withdraw then realise could have waited a few months e.g. after april to take remainders out to save x amount

So just to clarify this is the best way forward now that we have the rules:

1. Withdraw the 25% tax free amount as soon as possible, then transfer to offspring (offsprings income is irrelevant as its a gifted cash)

2. Workout full taxable income of the parent, then withdraw remainder of the balance split over 1-3 years by End of March this year, then April going forward, to make sure don't then raise the total income into the next tax bracket e.g. 50K if 20% (and again offsprings income is irrelevant on these amounts as well as its a gifted cash).

3. Just bear in mind if there is a death within 7 years, the 75% amount is then taxable as part of the estate, minus the 3k a year allowance, once the 7 years has passed, the transfer is clear of any tax risks

If that is correct, very simple now that you guys have explained clearly, does that plan sound correct, and thanks in advance. Any additional points just to bear in mind please do share its very helpful to pass this on to family and friends.

apologies as not sure how to edit the post, as well as the above if thats all correct, final questions:

Does adding the offspring as a beneficiary on the pension benefit in anyway? or thats only if there as no cashing out, and it was then to be the offsprings pension when parent dies? No point in doing this if the plan is to cash out completely ( just to understand any other options but the above plan sounds best)

Theres no issues with taking the 25% tax free amount, and full taxable amount in the same year, up to the tax threshold limit even if the 75% totals to full taxable amount 50k and 25% tax free goes well over that limit (sounds obvious that its fine as the 25% doesn't form part of whats taxed, but just double checking as didn't want any issues down the line)

coyrls

brehom5 said:

Linton said:

brehom5 said:

Linton said:

brehom5 said:

in the UK, please can someone confirm if this method is correct if parent has a untouched pension pot that needs passing to an offspring

example:

73 years old, untouched pension amount total 60k

This needs going to offspring as gift

Withdraw 25% tax free, transfer straight to offspring

withdrawn 75% which is taxable, transfer straight to offspring

Is there any other way to cash in on this to reduce the 75% tax, and as it will be gifted, should offspring be aware of any tax implications or the parent gifting it e.g. if using it to buy a home or any other investment?

Also if theres an alternative method which makes more sense e.g. cash out 25% tax free but then set the offspring as a beneficiary, and the offspring withdraws it after that?

Any advice appreciated

Withdrawing the money from the pension paying the tax then gifting it is the only way to do what you want whilst the parent is alive. 

Some points:
1) Best to make the withdrawals over 2 years if an extra £45K income in a single tax year would put the parent into the higher rate tax band.

2) Making the gift could cause problems if the parent is expecting the local council to pay for future care needs or becomes bankrupt or dies leaving insufficient money to pay any debts.

3) If the parent dies within 7 years the gift would still form part of their estate for tax purposes and could therefore potentially give rise to extra inheritance tax.

appreciate them points as theres a lot to understand on this.

1. So in a scenario, currently living on main pension with a small income, withdraw maximum amount, pay the tax on it but don't make sure total income plus pension withdrawal doesn't push it to the next tax band (excluding the 25% amount as that is classed as separate), is that correct, and does the pension company deduct tax on withdrawal?

2. and what are the problems that can arise on point 2 other than hoping the council can sufficiently cover the living costs? if current income covers everything is that problem covered? just so I get the worst case scenarios

3. thanks and also if that scenario happens, is it correct there is a 3k tax free gift limit which can be deducted from whatever is gifted in both the 2 years split, to slightly reduce that tax bill so the 25% works out tax free, plus potentially 6k of the remainder as that is gifted (and potentially last years as no gift last year, this year can be 6k, and next year 3k tax free cash gift)

1) Yes the pension company will deduct income tax prior to paying out the money.  However they will deduct more tax than expected as this will be the first ever payment in a completely new income stream. This extra tax will need to be reclaimed from HMRC.  There is an ongoing thread on this matter.

https://forums.moneysavingexpert.com/discussion/6582585/how-does-emergency-tax-work#latest

2) Deprivation of Assets.  If the council believe the parent has impoverished themselves in order to get their care paid by the state they can calculate the care payments due assuming that the parent still has the money. If the parent has more than enough to pay for care costs themselves there is no problem.

On bankruptcy the creditors could ask the courts to undo the gift.

3)  No, the £3K tax free gifting is only relevent to subsequent inheritance tax after death if the parent dies within 7 years.  It does not affect the income tax due on withdrawals.

PS possibly misunderstood your question..  The £3K gift allowance could help reduce IHT if parent dies within 7 years of making the gift.

3. Just bear in mind if there is a death within 7 years, the 75% amount is then taxable as part of the estate, minus the 3k a year allowance, once the 7 years has passed, the transfer is clear of any tax risks

The 100% amount transferred is potentially liable for IHT, there is no distinction between the tax free amount transferred and the taxable amount transferred.

DRS1

Why are you thinking of doing this?
Is it IHT planning?  Is IHT going to be relevant to your parent's estate when he dies?
Is it likely your parent will live the 7 years?  Are you thinking of doing this now because he is in good health and will likely survive the 7 years?  
Do you appreciate that if your parent dies before he is 75 then as things stand the pension would be "inherited" by his nominated beneficiaries totally tax free?
If he dies after 75 then the nominated beneficiaries will pay income tax at their marginal rates (so the tax free lump sum is lost and they may have a higher tax rate than he does)
The law change bringing pension pots into the charge to IHT is planned for 2027 and the tax situation will be worse then but if you take money out of the pension now you bring it into the scope of IHT now

brehom5

DRS1 said:

Why are you thinking of doing this?
Is it IHT planning?  Is IHT going to be relevant to your parent's estate when he dies?
Is it likely your parent will live the 7 years?  Are you thinking of doing this now because he is in good health and will likely survive the 7 years?  
Do you appreciate that if your parent dies before he is 75 then as things stand the pension would be "inherited" by his nominated beneficiaries totally tax free?
If he dies after 75 then the nominated beneficiaries will pay income tax at their marginal rates (so the tax free lump sum is lost and they may have a higher tax rate than he does)
The law change bringing pension pots into the charge to IHT is planned for 2027 and the tax situation will be worse then but if you take money out of the pension now you bring it into the scope of IHT now

this is a second pension pot not the main one for the parent, and the funds are not required. The offspring can then be gifted this. Do you think the plan does not sound good? or any other ideas or benefits of making the offspring a beneficiary?

Any further advice and points welcome so we understand all possible options and best way forward

brehom5

brehom5 said:

DRS1 said:

Why are you thinking of doing this?
Is it IHT planning?  Is IHT going to be relevant to your parent's estate when he dies?
Is it likely your parent will live the 7 years?  Are you thinking of doing this now because he is in good health and will likely survive the 7 years?  
Do you appreciate that if your parent dies before he is 75 then as things stand the pension would be "inherited" by his nominated beneficiaries totally tax free?
If he dies after 75 then the nominated beneficiaries will pay income tax at their marginal rates (so the tax free lump sum is lost and they may have a higher tax rate than he does)
The law change bringing pension pots into the charge to IHT is planned for 2027 and the tax situation will be worse then but if you take money out of the pension now you bring it into the scope of IHT now

this is a second pension pot not the main one for the parent, and the funds are not required. The offspring can then be gifted this. Do you think the plan does not sound good? or any other ideas or benefits of making the offspring a beneficiary?

Any further advice and points welcome so we understand all possible options and best way forward

Also I dont think theres any concern of parent dying in 7 years that just seems to be a scenario to be aware of so the family can be clear on potential risk ahead. But if 7 years pass then IHT is clear?

DRS1

brehom5 said:

brehom5 said:

DRS1 said:

Why are you thinking of doing this?
Is it IHT planning?  Is IHT going to be relevant to your parent's estate when he dies?
Is it likely your parent will live the 7 years?  Are you thinking of doing this now because he is in good health and will likely survive the 7 years?  
Do you appreciate that if your parent dies before he is 75 then as things stand the pension would be "inherited" by his nominated beneficiaries totally tax free?
If he dies after 75 then the nominated beneficiaries will pay income tax at their marginal rates (so the tax free lump sum is lost and they may have a higher tax rate than he does)
The law change bringing pension pots into the charge to IHT is planned for 2027 and the tax situation will be worse then but if you take money out of the pension now you bring it into the scope of IHT now

this is a second pension pot not the main one for the parent, and the funds are not required. The offspring can then be gifted this. Do you think the plan does not sound good? or any other ideas or benefits of making the offspring a beneficiary?

Any further advice and points welcome so we understand all possible options and best way forward

Also I dont think theres any concern of parent dying in 7 years that just seems to be a scenario to be aware of so the family can be clear on potential risk ahead. But if 7 years pass then IHT is clear?

Well here's hoping he makes it to 81 or at least past age 75.

brehom5

DRS1 said:

brehom5 said:

brehom5 said:

DRS1 said:

Why are you thinking of doing this?
Is it IHT planning?  Is IHT going to be relevant to your parent's estate when he dies?
Is it likely your parent will live the 7 years?  Are you thinking of doing this now because he is in good health and will likely survive the 7 years?  
Do you appreciate that if your parent dies before he is 75 then as things stand the pension would be "inherited" by his nominated beneficiaries totally tax free?
If he dies after 75 then the nominated beneficiaries will pay income tax at their marginal rates (so the tax free lump sum is lost and they may have a higher tax rate than he does)
The law change bringing pension pots into the charge to IHT is planned for 2027 and the tax situation will be worse then but if you take money out of the pension now you bring it into the scope of IHT now

this is a second pension pot not the main one for the parent, and the funds are not required. The offspring can then be gifted this. Do you think the plan does not sound good? or any other ideas or benefits of making the offspring a beneficiary?

Any further advice and points welcome so we understand all possible options and best way forward

Also I dont think theres any concern of parent dying in 7 years that just seems to be a scenario to be aware of so the family can be clear on potential risk ahead. But if 7 years pass then IHT is clear?

Well here's hoping he makes it to 81 or at least past age 75.

if 25% tax free is cashed out, then rest kept in the pot, and the offspring is added as a beneficiary, is it basically then inherited tax free, and offspring has to wait until retirement age to use it? and does that 25% tax free cashout reset?