I would say that although people don’t like talking about death I believe that talking about death has even less interest. The recent budget saw a number of changes in relation to pensions which will gradually come into force over the next year. One option for now though is to think about paying the death benefit into a trust.
An important feature of your personal pension plan is the death benefit. Many personal pensions will pay out the fund value to the estate adding to a potential inheritance tax bill of the beneficiary who is often the spouse/legal partner.
A lot of pension members will complete an expression of wish to make sure their loved ones receive the benefits. If you’re married it also means that the pension remains part of the combined estate which will be liable to inheritance tax if greater than £650,000 (2014/15 tax year and assuming both nil rate bands are available in full).
The solution is simple but often overlooked without good legal and financial planning. Simply have your pension death benefits paid to a trust. Your spouse/legal partner can have full access to the money. What is not spent can, on their death, be paid to your children with no inheritance tax implications.
A word of warning – you should always get professional advice to avoid any unintended consequences. The more complicated your financial affairs the more important to get sound advice.
These comments do not constitute personalised advice and are provided by Mr Neil Muir DipPFS; CFP Director of NTM Financial Services Ltd.
If you would like expert advice on pensions please contact Neil Muir on 029 2076 6400 or contact him by e-mail on firstname.lastname@example.org.
If you would like to receive expert advice about making a Will, please contact Venisha Shah on 020 8899 6620 or email email@example.com