Using EOW and Wills to help pass on pension wealth

Nadia Khan DipPFS Cert CII (MP)

Wren Sterling

Financial Adviser, Mortgage Adviser, Will & Estate Planner, Investment & Wealth Manager, Pension Adviser

Clients can pass on their pension assets to a beneficiary of their choice on their death in a number of ways but keeping expression of wishes forms and wills up to date

A family bereavement can be challenging for all parties involved and the last thing anyone wants when mourning a loved one is to unravel their estate and pension intentions. These are difficult conversations that many people avoid, but failing to address them in advance can lead to unintended outcomes where benefits are not paid as the deceased would have wished.

Effective planning is crucial, and a pension should be considered alongside a will. Some individuals may choose to provide for loved ones in their will, paid through their estate, while others may decide to allocate provisions via their pension. This decision depends on the client’s wishes and also effective tax planning.

So what should clients consider during their lifetime to plan for their beneficiary? And what do potential beneficiary need to think about?

With a pension, it is possible to mitigate potential IHT charges. Assets distributed via a will form part of the deceased estate and would usually be subject to IHT. But, with a pension the assets can be passed on to a beneficiary free from inheritance tax. This is because the assets held within the pension generally do not form part of the individual’s estate for inheritance tax purposes.

Clients must create and regularly update an expression of wishes (EOW), especially in the event of significant life changes such as marriage, divorce, or the birth of children. An EOW states who they would choose to receive the remaining pension assets upon the client’s death. The client can specify one or more beneficiary and define the proportions in which the assets will be distributed.

While an EOW is not binding and the final discretion lies with the pension trustees, this serves as the strongest indicator of the client’s desired distribution of pension assets, underscoring the importance of keeping it up to date.

It is crucial to remember that EOW are vitally important in ensuring that a beneficiary have all available options to them. To avoid potential problems, clients should maintain a robust and up to date expression of wishes that truly reflects their intentions. Moreover, ensuring that all involved parties are aware of the client’s wishes can significantly reduce the likelihood of complications arising from disputes among potential beneficiaries.

Pension Planning
Legacy and Succession Planning
Beneficiaries
IHT and Estate Planning
Expression of Wishes form

Nadia Khan DipPFS Cert CII (MP)

Wren Sterling

Financial Adviser, Mortgage Adviser, Will & Estate Planner, Investment & Wealth Manager, Pension Adviser

I am an Independent Financial and Mortgage Adviser and have worked in Financial Services for over 12 years. During my career I gained experience in assisting both individual and corporate clients.…