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Pensions Scheme Death Benefits Trust

Death BenefitsPlay Video

When it comes to trusts, we’re here to help you choose the one that best reflects what you want to achieve - always with tax-efficiency and succession plans in mind.

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What is a trust?

A trust is a type of legal arrangement that is recognised and enforceable in the courts. A trust is also sometimes called a settlement.

You will be the ‘settlor’ who establishes the trust. You appoint trustees to look after the assets of the trust, called the trust fund. The trustees agree to look after the trust fund for the benefit of people you choose. The detailed rules of the trust are set out in a trust deed.

Watch a short video about the death benefit pension trust »

Who are the trustees?

The trustees’ job is to ensure that the terms of the trust are complied with. Information on the role of the trustees, guidance on whom you might think about appointing and information about their duties and responsibilities is set out in our Pensions Scheme Death Benefit Trust Pack.

Why should I set up a trust to receive pension death benefits?

Most people simply nominate their pension death benefits to their spouse or civil partner on their death. Although there should be no inheritance tax payable at that stage, the value of the survivor’s estate will have been increased by the amount of the pension lump sum. This would potentially be subject to Inheritance Tax (IHT) on their death. If for example your pension death benefits were £300,000, this might result in an IHT liability of £120,000 payable on the death of your spouse.

By nominating a trust to receive the pension death benefits, the money can be made available to the survivor via the trust whilst at the same time ensuring that its value is not counted as part of the survivor’s estate when they die. By using a trust in this way, and using the example above, the £120,000 in IHT would be saved.

If you are a professional adviser you can request a Death Benefits Trusts pack which is designed for you to complete with your client.

Please get in touch if you have any questions or we can be of any further assistance.

For expert advice on individual wealth matters

If you are a professional adviser you can request a Death Benefits Trusts pack which is designed for you to complete with your client.

Request your copy today...

Paul Davies

Partner

I am a Partner specialising in private client matters and providing practical advice across the different tax and legal issues that face high-net-worth individuals, trustees and executors.