My draft Consent Order has the phrase in relation to my husband''s final salary pension (in which we have agreed I will not share as getting higher share of house):
J "irrevocably to nominate that the children of the family, for so long as the periodical payments order shall subsist, shall receive death benefits payable in the event of his death in service or deferment under the **** Pension Scheme and to provide evidence of receipt by the Trustees of such nomination".
My questions are:
1. Does using the word "irrevocable" then mean that the Trustees do not have discretion so any lump sum payment may become liable to IHT?
(Section from TPAS - "This is because death benefit lump sums must be payable at the discretion of the trustees in order to be exempt from Inheritance Tax")
2. Is it usual that the children would only receive the death benefits until the end of the periodical payments (ie end of college/uni) ? Presumably after that they are no longer dependants?
3. Is it better that he just fills in "The Expression of Wish" form?
1. you need to check with a specialist tax advisor , but *probably* not - I suspect you will find that the pension has something in the small print saying that the trustees still have discretion even where a nomination has ben made.
2. Yes. However, if the money is to go to the children directly, not to you for their benefit, you may want to consider whether there also needs to be something in place to provide you with some money to replace the lost child support if he dies before the mainenance ends - Again, check the rules ofthe pension - if the nominee is a child, does the money get paid to their parent for their support, or would it have to be held on trust for them to recieve when they turn 18?
3. Probably not. He could change that at any time, and would not have to tell you or the children that he had done so.
4. Again, you would need to take specific advice.I don''t think there would be any immediate effects, as the nomination doesn''t take effect unless and until he dies, and you can''t know, today, what tax rules will be in effet at that time.