Money Moral Dilemma: Should I contact my late husband's ex, who's a beneficiary on his pension?

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82062555#Comment_82062555

In the US things like DC pension accounts have always been part of the value of the estate for estate tax purposes. The federal estate tax allowance is $15M per individual, $30M for a married couple, so it's irrelevant for most estates. However, some states have smaller allowances. If estate taxes are due then the executor will initially use the residue of the estate to pay them…that might be proceeds from the sale of a house or bank accounts. Most estate plans pass the house and bank accounts into a trust to avoid probate and allow the executor to manage the estate. If there isn't enough money in that trust to pay all the bills then the direct beneficiaries of things like DC pensions are legally required to pay their proportion of the bills.

JayD

To be honest, the whole dilemma seems incredibly fishy to me.

MMD staff may well have genuinely received it but the sender may not be so genuine.

I am surprised it was published her - and if the sender is genuinely in this dilemma, they need to have included much more detail for anyone to give a clear response to it.

For my part, I have no intention of trying to do so!

MandoTopDog

I don't know much about this situation. It strikes me the ex is a bit of a money grabber. Why would she not question, how this came about? She obviously doesn't have a conscience. Or why would she just accept it?

Good Luck to the wife.

mrklaw

whether real or fake its certainly lined up nicely to create some reaction.

I do think pensions are due for reform - in the olden days when you took hobsons choice of the only annuity your provider offers and then you had no money left, it was easy peasy. Now - more than 10 years on from pensions freedom I’m not sure they’re fit for purpose in a multitude of ways.

• multiple pension funds are common but there is no easy centralised way to see that using eg your NI number which they all have. Hopefully the pensions dashboard might actually help there. eventually
• tracking of tax free cash is left up to the individual to track - again, if you take £1000 TFC why is the pension fund not reporting that to HMRC and it gets tagged against your NI number or something? if I have multiple pots now I need to have a notepad/spreadsheet for every withdrawal and tell HMRC when I’ve used up my allowance? (‘luckily’ not likely an issue for me)
• Inheritance - soon they’ll be part of your estate. So perhaps they should behave like they’re part of your estate more
  • why does each fund withhold a % of the pot to satisfy HMRC rather than it all going into a single pot and the executer deciding where to satisfy any IHT from? in cases with property it might be preferable to liquidate a pension pot entirely rather than sell a house
  • (specifically to this ‘moral dilemma’ - why do we still rely on a silly form in a pension to decide who to leave it to? why wouldn’t a will be expected to supercede that? ‘l leave the full value of my estate to…’ - well the pension is your estate for IHT purposes but the trustees ignore it from a bequeathment side. I can imagine its very easy to forget to update when you have more than one, especially if you might regularly update your wills - which seems a logical place to hold your wishes

QrizB

https://forums.moneysavingexpert.com/discussion/comment/82063306#Comment_82063306

I don't know much about this situation. It strikes me the wife is a bit of a money grabber. Why would she question how this came about? She obviously doesn't have a conscience. Or why wouldn't she just accept it?

Good Luck to the ex.

n15h

These types of dilemmas and articles always serve as a reminder to regularly spend some time with your partner/loved ones/next of kin etc. and together go through your paperwork / EOW / Wills to ensure they are up to date with the correct information such as beneficiaries. It may be a couple of days of waddling through paperwork and making any updates, yet putting in that work sooner will mean a smaller chance of tribulations/complexities such as the OP's dilemma.

In regards to the OP's dilemma, in my opinion (and this is only that):

• I think the OP is likely to have very little to no chance of success in trying to get anything back from her partner's ex. I appreciate the OP is facing some financial difficulties but the ex is not obligated to give her the money or care about the OP's financial difficulties.
• There may be a moral argument about whether the ex should return the money to the OP given the circumstances, but the right thing that should have been done is the husband and wife checking/updating their pensions/wills etc. together at some point in their 26 years of marriage.
• We don't know the ex's circumstances and whether she has a need for that money - and therefore another side to the moral argument for the ex to retain rather than return the money.
• As per the OP's post, she was aware that her husband was never good with money and had early onset dementia - which makes it even more important to proactively have these conversations and take action sooner while either/both parties are of sound mind and capability.

teresa54

There is also the potential for fraud. I.e. the ex-girlfriend claiming they were still in a relationship.

Heck, that's a stone you'd want left unturned.

highlander58

https://forums.moneysavingexpert.com/discussion/comment/82061559#Comment_82061559

As said by various others - hard to comment sensibly on such scant & questionable info. So I won’t.
Next time - can you please clarify the obvious holes in the OP’s account, before agreeing to use it?
You say it’s an ‘interesting talking point around the legal position and what people consider to be morally fair”. But the law is the law - we can’t talk about it here without some proper facts. Morality doesn’t really come into it.
About the only worthwhile thing to say on this MMD (as some others have) is: keep your beneficiaries up to date.

Silvertabby

https://forums.moneysavingexpert.com/discussion/comment/82063445#Comment_82063445

That's a bit harsh! The ex girlfriend was from 30 years ago, whereas the wife had been married for the past 26 years, and has children.

The full details aren't clear, but let's just suppose this is a DB scheme with a one-off death benefit lump sum paid in addition to survivor's benefits. The lump sum, a type of guarantee if you like, is only paid out if the fund member dies before starting to draw their benefits or, on a sliding scale, if they die within 5/10 years of taking their pension. In theory, the lump sum can be left to anyone the fund member chooses, although the Trustees have discretionary powers to re-direct payment if necessary.

Survivor's pensions, however, may not require the completion of a nomination form, as they are paid in accordance with the scheme rules rather than at the Trustee's discretion. Typically, only a spouse, an eligible co-habiting partner, or eligible children will receive pension benefits.

In this particular dilemma, it could be that the fund member completed a lump sum nomination form 30 years ago and didn't update it when his life changed. Then, on his death his widow (and children, if eligible) received survivor's pensions - but the Trustees awarded the death benefit to the ex girlfriend. If so, this would be a very peculiar decision. I can recall a couple of similar LGPS cases which received a very quick and easy Trustee decision: ie, pay the lump sum to the widow. The fact that this didn't happen in this case would indicate that there is additional information that we are not party to, and so we are unable to give a definitive response.

But the importance of keeping those nomination forms updated cannot be expressed enough, as not all cases are as clear cut as a 30 year old nomination form followed by a clear, long term, relationship with someone else

Another case from memory… Chap nominated his live-in girlfriend. Girlfriend not only ran off with another man, but she took the chap's life savings with her. He went back home to live with his mum, and tragically died 2 years later. Mum tried to claim his in service death benefits (so a considerable amount) because she needed money to pay for his funeral. But the nomination form was only two years old, so you can see where this is going..…Ex girlfriend heard about the death, knew she had been nominated, and put in her own claim. Which was paid to her in view of the very recent nomination form. Last I heard mum tried to get the ex to at least pay the funeral expenses, but she obviously didn't as the chap's ex colleagues set up a go-fund-me account for the funeral.

Prothet_of_Doom

The company I work for have made it very clear in an email every year to check and alter your expression of wishes for your pension.