Executor has moved all money into her personal account

[SonicHedgeHog]

A friend is in a spot of bother. Her husband died and his daughter (her step daughter) is the executor of one of his pensions. Our friend is named as the main beneficiary of the will with only £150k of the house value going to kids whenever the house is sold. The daughter has used her power as executor to remove all £250k from the pension and give it to her and her brother.

In my non-legal eyes this is a criminal offence. The daughter is not the beneficiary and has abused her powers as executor and stolen the money. My friend’s lawyer is on holiday this week and is understandably very worried. Can anyone with any legal training or experience confirm that what the daughter has done is about as wrong as you can get and starting legal proceedings is the way to go?

[Vixpy1]

It depends who he nominated as beneficiary to his Pension when he died, this is lodged directly with the pension fund

[SonicHedgeHog]

Our friend is the only beneficiary of the will. The exception is that when the family house is sold the kids get £150k from the equity.

[Vixpy1]

SonicHedgeHog said:

Our friend is the only beneficiary of the will. The exception is that when the family house is sold the kids get £150k from the equity.

Possible he did this ?

https://www.lppapensions.co.uk/everything-you-need...

[Newc]

SonicHedgeHog said:

Our friend is the only beneficiary of the will. The exception is that when the family house is sold the kids get £150k from the equity.

If a SIPP is correctly set up, its nominated beneficiaries will take precedence over any bequests in the will.

[SonicHedgeHog]

Vixpy1 said:

Possible he did this ?

https://www.lppapensions.co.uk/everything-you-need...

No, didn’t do that.

[SonicHedgeHog]

Newc said:

SonicHedgeHog said:

Our friend is the only beneficiary of the will. The exception is that when the family house is sold the kids get £150k from the equity.

If a SIPP is correctly set up, its nominated beneficiaries will take precedence over any bequests in the will.

That’s what I thought. Daughter has used her powers as executor to give her and her brother money that is not theirs. I would have thought this is a criminal offence?

[Ean218]

SonicHedgeHog said:

That’s what I thought. Daughter has used her powers as executor to give her and her brother money that is not theirs. I would have thought this is a criminal offence?

The pension is not neccessarily anything to do with the will and the executor would not have any role in the winding up of a pension scheme. If a letter of wishes was lodged with the pension fund or beneficiaries were named then that is to whom the pension will be paid out. An executor cannot just withdraw pension money as cash without the say so of the pension manager. The pension manager would be in deep trouble with the pensions regulator if they just paid it out willy nilly.

[mac96]

SonicHedgeHog said:

Newc said:

SonicHedgeHog said:

Our friend is the only beneficiary of the will. The exception is that when the family house is sold the kids get £150k from the equity.

If a SIPP is correctly set up, its nominated beneficiaries will take precedence over any bequests in the will.

That’s what I thought. Daughter has used her powers as executor to give her and her brother money that is not theirs. I would have thought this is a criminal offence?

My understanding is that pension funds are not part of the estate and so do not follow provisions of the will; the pensioner nominates to the pension company who they wish to benefit from anything left over at death. Pension company normally follows this nomination but is not obliged to.

Therefor it is possible that the friend is indeed only beneficiary of the will (from the estate) but is not the nominated beneficiary of the pension moneys. That could be the daughter.

It sounds as if proper legal advice is needed, unless the pension company is prepared to explain what and why they have done- unlikely I would think. Is the daughter not prepared to share paperwork to show who pension nominated beneficiaries were?

[elanfan]

Reoort to the Police as fraud?

[Roger Irrelevant]

Ean218 said:

SonicHedgeHog said:

That’s what I thought. Daughter has used her powers as executor to give her and her brother money that is not theirs. I would have thought this is a criminal offence?

The pension is not neccessarily anything to do with the will and the executor would not have any role in the winding up of a pension scheme. If a letter of wishes was lodged with the pension fund or beneficiaries were named then that is to whom the pension will be paid out. An executor cannot just withdraw pension money as cash without the say so of the pension manager. The pension manager would be in deep trouble with the pensions regulator if they just paid it out willy nilly.

Spot on. In the majority of cases the trustee or manager of a DC pension scheme will have discretion as to who the death benefits (i.e. the value of the pension), is paid to. Essentially this is done in order that the pension death benefits do not form part of the deceased's estate and thus are not subject to IHT. Anybody with sense will fill out an expression of wishes form so that the trustee/manager knows who the deceased wanted their pension to go to, but the trustee/manager doesn't have to follow that. Paying death benefits to the offspring of the deceased is certain to be within the rules of the relevant pension scheme and so I'd be pretty sure that no criminal offence has been committed here. The alternative is that the deceased had directed that the pension be paid to somebody in particular, the trustee/manager was bound by that, but for some reason they decided to ignore all that and so risk getting in deep trouble like you say.

[SonicHedgeHog]

Thanks for the replies. I knew I neeed more detail but kind of hoped it would be black and white. I’ll tell her to wait for the solicitor next week. It cannot be right that everything was left to the wife bar a share of the house and yet the daughter has emptied £250k out of the pension fund and split it with her brother. I know it sounds crazy but the children are utter cretins….

[randlemarcus]

SonicHedgeHog said:

Thanks for the replies. I knew I neeed more detail but kind of hoped it would be black and white. I’ll tell her to wait for the solicitor next week. It cannot be right that everything was left to the wife bar a share of the house and yet the daughter has emptied £250k out of the pension fund and split it with her brother. I know it sounds crazy but the children are utter cretins….

Would it be possible , while waiting for the solicitor to return from holiday, to contact the pension manager, introduce herself as the widow, and ask about the expression of wish that they held? As above, the will has nothing to do with that, and if the EOW says the pension was for his children, then that's where he wanted it to go.

[darreni]

The posts above are correct, the pension falls outside of a will. The step daughter cannot be an executor of one of his pensions, that is incorrect. She is more likely to be one of the nominated beneficiaries of the pension (outside of the will).

It sounds as though your limited knowledge is stoking the flames, maybe wait for the facts first?

[Ean218]

SonicHedgeHog said:

Thanks for the replies. I knew I neeed more detail but kind of hoped it would be black and white. I’ll tell her to wait for the solicitor next week. It cannot be right that everything was left to the wife bar a share of the house and yet the daughter has emptied £250k out of the pension fund and split it with her brother. I know it sounds crazy but the children are utter cretins….

It looks pretty black and white to me. The father's expression of wishes will have said give the pension to my children and that is what has happened. I doubt the son and daughter even knew until the pension company told them.

It may even be that the letter was mistakenly never updated when he re-married but that is hardly the kids' fault.

[Beggarall]

The answers above are right - pensions are outside of the Estate as far as inheritance tax is concerned. If she were a nominated beneficiary of the pension fund and if it has been paid out so quickly, then she is due for a big surprise when HMRC wants its cut! Pensions are taken out as income and over £100K will lose all her personal tax allowances plus push her into a higher rate band. Doesn't sound like a very shrewd or considered move

[darreni]

Beggarall said:

The answers above are right - pensions are outside of the Estate as far as inheritance tax is concerned. If she were a nominated beneficiary of the pension fund and if it has been paid out so quickly, then she is due for a big surprise when HMRC wants its cut! Pensions are taken out as income and over £100K will lose all her personal tax allowances plus push her into a higher rate band. Doesn't sound like a very shrewd or considered move

Sorry, that is not correct.

[BertBert]

Beggarall said:

The answers above are right - pensions are outside of the Estate as far as inheritance tax is concerned. If she were a nominated beneficiary of the pension fund and if it has been paid out so quickly, then she is due for a big surprise when HMRC wants its cut! Pensions are taken out as income and over £100K will lose all her personal tax allowances plus push her into a higher rate band. Doesn't sound like a very shrewd or considered move

Is this the case for the beneficiaries when the pension holder has died? Googling seem to think it depends on the age of the person who has died.

[mac96]

I understand why people might be reluctant to do so, but it would be helpful if posters who have professional knowledge of this identified themselves as such. My comment was just as someone who has recently had to consider these issues having just made a lot of changes to my pension arrangements and will.
Not claiming any expertise beyond that.

[Ean218]

You don't really need much professional knowledge, one of the key selling points of SIPPs is that the money can be kept free of IHT if you die early.