How to leave Death in Service to child not spouse?
Discussion
Technically, pension benefits are not part of the deceased’s estate. We are not talking about “inheritance” here; ultimately it’s down to the discretion of the pension scheme’s trustees to decide who receives the death-in-service benefit, and they are guided by the “expression of wish”, which is a piece of paper signed by your wife detailing how she would like the benefit to be distributed.
Your wife could simply update her expression of wish to leave everything to the daughter rather than you. She can request the appropriate form from the pension scheme’s administrator. It might even be possible to do it online.
The pension trustees are not legally compelled to do what it says in the expression of wish. So for example if they think the expression of wish is out of date and fails to take into account significant changes in family circumstance (e.g. divorce, remarriage, etc), or if the trustees consider the expression of wish grossly unfair on one or more of the deceased’s dependants, then they are entirely entitled to adjust or ignore the expression of wish. If you and your wife have another child after setting the expression of wish to give everything to your existing daughter and your wife forgets to update the expression of wish to include the new dependant, I’m 99% sure the trustees would treat that as an oversight and would give the benefit 50:50 between the two children.
Pension trustees are not bound by the deceased’s will, because the benefits are not part of the estate. However, if there is any doubt over the expression of wish then the trustees would probably look at the will to see if it contains any clues about what the deceased might have wanted to happen to the benefits.
However, all this is the exception rather than the rule. Generally trustees are heavily guided by the expression of wish, and will simply do whatever it says if it is reasonable and reflects current circumstances. And I would think the trustees would be entirely happy with an expression of wish leaving everything to the daughter (assuming there are no other dependants who would need support).
If your wife trusts you, then surely she needn’t worry anyway. If for some reason the trustees ignore her expression of wish and give you the money, you can simply pass it on to the daughter.
Your wife could simply update her expression of wish to leave everything to the daughter rather than you. She can request the appropriate form from the pension scheme’s administrator. It might even be possible to do it online.
The pension trustees are not legally compelled to do what it says in the expression of wish. So for example if they think the expression of wish is out of date and fails to take into account significant changes in family circumstance (e.g. divorce, remarriage, etc), or if the trustees consider the expression of wish grossly unfair on one or more of the deceased’s dependants, then they are entirely entitled to adjust or ignore the expression of wish. If you and your wife have another child after setting the expression of wish to give everything to your existing daughter and your wife forgets to update the expression of wish to include the new dependant, I’m 99% sure the trustees would treat that as an oversight and would give the benefit 50:50 between the two children.
Pension trustees are not bound by the deceased’s will, because the benefits are not part of the estate. However, if there is any doubt over the expression of wish then the trustees would probably look at the will to see if it contains any clues about what the deceased might have wanted to happen to the benefits.
However, all this is the exception rather than the rule. Generally trustees are heavily guided by the expression of wish, and will simply do whatever it says if it is reasonable and reflects current circumstances. And I would think the trustees would be entirely happy with an expression of wish leaving everything to the daughter (assuming there are no other dependants who would need support).
If your wife trusts you, then surely she needn’t worry anyway. If for some reason the trustees ignore her expression of wish and give you the money, you can simply pass it on to the daughter.
Edited by Dr Mike Oxgreen on Sunday 17th June 05:51
OP we might be talking very significant sums of money here - for instance my Death in Service is 6x salary.
As the 2nd post stated your wife can fill out an expression of wish which is what we have done. However for us if got forbid that did happen we have 3 very young kids the surviving spouse would frankly have to give up work for many years until they are of a certain age and even then when going back it would be part time. As such 6x base salary gross would be very welcome ie for most people it would clear whatever mortgage they had and leave a very generous pot.
Also I Level if it is to be given to a minor you would be looking after the funds until she comes of age and it may we’ll be the case it’s sll spent by the time she is of age due to potentially survival family finances taking priority over what would be a nice to have/do.
As the 2nd post stated your wife can fill out an expression of wish which is what we have done. However for us if got forbid that did happen we have 3 very young kids the surviving spouse would frankly have to give up work for many years until they are of a certain age and even then when going back it would be part time. As such 6x base salary gross would be very welcome ie for most people it would clear whatever mortgage they had and leave a very generous pot.
Also I Level if it is to be given to a minor you would be looking after the funds until she comes of age and it may we’ll be the case it’s sll spent by the time she is of age due to potentially survival family finances taking priority over what would be a nice to have/do.
A word of warning. Most people who die whilst of working age still don't get death in service, because they aren't in service at the time of death. They get cancer, or some other bloody awful illness, and they've had to leave their job long before they die.
Do not include it in your life insurance portfolio. It's just a useful extra, should you die in a car crash or some other accident, or drop dead of a heart attack or brain haemorrhage or similar.
But don't be thinking "My DIS is 6 x annual salary, so that's £300K, so I don't need much or any other life cover. You really do!
The reason so many employers give DIS is because it sounds really appealing, like a generous benefit, and it's cheap to buy. It's cheap to buy for a reason, because it's rarely claimed on.
Boring lecture over.
Do not include it in your life insurance portfolio. It's just a useful extra, should you die in a car crash or some other accident, or drop dead of a heart attack or brain haemorrhage or similar.
But don't be thinking "My DIS is 6 x annual salary, so that's £300K, so I don't need much or any other life cover. You really do!
The reason so many employers give DIS is because it sounds really appealing, like a generous benefit, and it's cheap to buy. It's cheap to buy for a reason, because it's rarely claimed on.
Boring lecture over.
Ok thanks all. But even if we forget the death in service, how else can she make part of her estate go straight to our daughter and not me? Although would that then incur IHT as spouse doesn’t pay IHT but would the child? Eg if house or whatever left to child.
Is there a decent guide anywhere I can read that includes info about IHT planning etc without simply saying go to a specialist to make a will? I want to read stuff first.
Is there a decent guide anywhere I can read that includes info about IHT planning etc without simply saying go to a specialist to make a will? I want to read stuff first.
CoolHands said:
Ok thanks all. But even if we forget the death in service, how else can she make part of her estate go straight to our daughter and not me? Although would that then incur IHT as spouse doesn’t pay IHT but would the child? Eg if house or whatever left to child.
Is there a decent guide anywhere I can read that includes info about IHT planning etc without simply saying go to a specialist to make a will? I want to read stuff first.
She needs a will and can then state exactly what is being left to who. Is there a decent guide anywhere I can read that includes info about IHT planning etc without simply saying go to a specialist to make a will? I want to read stuff first.
I would recommend you book some time in with an IFA - everyone should have a will it makes it so much easier when the inevitable happens and should make your wishes happen (unless it’s contested)
TwigtheWonderkid said:
A word of warning. Most people who die whilst of working age still don't get death in service, because they aren't in service at the time of death. They get cancer, or some other bloody awful illness, and they've had to leave their job long before they die.
Do not include it in your life insurance portfolio. It's just a useful extra, should you die in a car crash or some other accident, or drop dead of a heart attack or brain haemorrhage or similar.
But don't be thinking "My DIS is 6 x annual salary, so that's £300K, so I don't need much or any other life cover. You really do!
The reason so many employers give DIS is because it sounds really appealing, like a generous benefit, and it's cheap to buy. It's cheap to buy for a reason, because it's rarely claimed on.
Boring lecture over.
That's really useful, I hadn't thought of that. I've been wondering why my life insurance costs so much to cover the whole of the mortgage when I thought I didn't need cover for the full amount due to DIS. However, it takes at least a year to get ill health retirement where I work. During which time I suspect a terminal illness will have succeeded.Do not include it in your life insurance portfolio. It's just a useful extra, should you die in a car crash or some other accident, or drop dead of a heart attack or brain haemorrhage or similar.
But don't be thinking "My DIS is 6 x annual salary, so that's £300K, so I don't need much or any other life cover. You really do!
The reason so many employers give DIS is because it sounds really appealing, like a generous benefit, and it's cheap to buy. It's cheap to buy for a reason, because it's rarely claimed on.
Boring lecture over.
I too had been looking into leaving most of my DIS to my son as my partner will be getting enough from the life insurance. She'll only waste it on shoes and cushions.
As far as I understood from limited research, a trust needs to be set up and then, obviously, trustees appointed who should be neutral. Other than paying a solicitor to be a trustee, I don't really have anyone suitable I could ask. So this has put me off setting up a trust.
Reading. Between the lines from what has been posted do you and your wife have children from previous marriage (ie your wife wantinfvto leave it to the daughter and now you wanting to leave it to your son?).
From looking online basic life insurance is about £6pcm which pays out £100k.
From looking online basic life insurance is about £6pcm which pays out £100k.
CoolHands: Your wife needs to make a will to control what happens to her estate, and she needs to fill in an expression of wish to control (or at least to influence) what happens to her pension benefits. The two things are separate. Pension benefits are not part of your wife’s estate.
Regarding IHT, everyone has an IHT allowance, currently £325k.
If your wife’s will leaves part of her estate directly to your daughter, then IHT would only kick in if that portion exceeds £325k. Strictly speaking it’s the estate that pays IHT rather than the beneficiary.
If that portion of the estate is less than £325k, then no IHT will be payable. Any remaining allowance will pass to you when you die, so IHT would then only kick in if your estate exceeds £325k (your allowance) plus the remaining allowance from your wife. So let’s say she leaves £200k to your daughter, then no IHT is payable. She’s only used £200k of her IHT allowance, so the remaining £125k passes to you and you’ll end up with a £450k IHT allowance (£325k + £125k).
The “normal” situation is that the first spouse to die leaves everything to the surviving spouse, who then has a £650k IHT allowance on their death.
Note that IHT does not apply to pension benefits, because they’re not part of the estate (as I may have mentioned).
If your wife’s will leaves part of her estate directly to your daughter, then IHT would only kick in if that portion exceeds £325k. Strictly speaking it’s the estate that pays IHT rather than the beneficiary.
If that portion of the estate is less than £325k, then no IHT will be payable. Any remaining allowance will pass to you when you die, so IHT would then only kick in if your estate exceeds £325k (your allowance) plus the remaining allowance from your wife. So let’s say she leaves £200k to your daughter, then no IHT is payable. She’s only used £200k of her IHT allowance, so the remaining £125k passes to you and you’ll end up with a £450k IHT allowance (£325k + £125k).
The “normal” situation is that the first spouse to die leaves everything to the surviving spouse, who then has a £650k IHT allowance on their death.
Note that IHT does not apply to pension benefits, because they’re not part of the estate (as I may have mentioned).
Edited by Dr Mike Oxgreen on Sunday 17th June 13:38
TwigtheWonderkid said:
A word of warning. Most people who die whilst of working age still don't get death in service, because they aren't in service at the time of death. They get cancer, or some other bloody awful illness, and they've had to leave their job long before they die.
It does depend a bit on the employer - this happened to someone who worked for me a few years ago at a large Corporate, and they were put on long-term sick leave, but were still officially employed, until they died. So the death in service did pay out.TwigtheWonderkid said:
A word of warning. Most people who die whilst of working age still don't get death in service, because they aren't in service at the time of death. They get cancer, or some other bloody awful illness, and they've had to leave their job long before they die.
A friend of mine was diagnosed with a probably-terminal cancer about 18 months ago. Whilst most people would think 'f
k this, I'll quit my job, chill out and travel the world while I can', he's working to the bitter end for his 4 kids because his DIS is 9x salary.outnumbered said:
TwigtheWonderkid said:
A word of warning. Most people who die whilst of working age still don't get death in service, because they aren't in service at the time of death. They get cancer, or some other bloody awful illness, and they've had to leave their job long before they die.
It does depend a bit on the employer - this happened to someone who worked for me a few years ago at a large Corporate, and they were put on long-term sick leave, but were still officially employed, until they died. So the death in service did pay out.I agree with most of the guidance etc posted here.
However, in the second post there is a comment that makes out typical trustee procedure is to go along with the nomination form completed by the now deceased member. I strongly disagree with this: in fact it could be considered a dereliction of duty if trustees adopted such a procedure. They are legally required to investigate the personal circumstances of the deceased at the time of death, take note of who are all the potential beneficiaries as described by the trust deed, gather whatever information they feel they need, then make their decision and record it in the trustees' minutes. Of course, if the deceased has completed a nomination form the trustees need to consider it and whether or not it's recent ie it matches the circumstances of the deceased at death. In my experience this is how the vast majority of trustees act, and they have to be able to justify their decision if challenged, which they sometimes are.
There are two reasons why death in service benefits are written under a discretionary trust. First, any amounts paid other than directly to the deceased's estate do not qualify for IHT, meaning the beneficiaries benefit to the tune of 100% of what's available. Second, the amounts can be paid much quicker than via a will because the processes are much simpler.
R.
However, in the second post there is a comment that makes out typical trustee procedure is to go along with the nomination form completed by the now deceased member. I strongly disagree with this: in fact it could be considered a dereliction of duty if trustees adopted such a procedure. They are legally required to investigate the personal circumstances of the deceased at the time of death, take note of who are all the potential beneficiaries as described by the trust deed, gather whatever information they feel they need, then make their decision and record it in the trustees' minutes. Of course, if the deceased has completed a nomination form the trustees need to consider it and whether or not it's recent ie it matches the circumstances of the deceased at death. In my experience this is how the vast majority of trustees act, and they have to be able to justify their decision if challenged, which they sometimes are.
There are two reasons why death in service benefits are written under a discretionary trust. First, any amounts paid other than directly to the deceased's estate do not qualify for IHT, meaning the beneficiaries benefit to the tune of 100% of what's available. Second, the amounts can be paid much quicker than via a will because the processes are much simpler.
R.
As a Trustee I have to say that it is incredibly rare to not follow the Expression of Wish/Nominated Beneficiary instructions unless the beneficiary is a criminal/terrorist/you know what I mean, or there is a postdated will that flies in the face of such instruction without factoring in said instructions (i.e. I leave my pension to my kids for IHT reasons and the rest of my estate, minus my IHT allowance to my partner).
As a Trustee it is far harder to justify deviating from written instructions in such matters that it is to justify such deviations.
Aside from this, sorry to hear about your mate, Simpo Two.
As a Trustee it is far harder to justify deviating from written instructions in such matters that it is to justify such deviations.
Aside from this, sorry to hear about your mate, Simpo Two.
Simpo Two said:
A friend of mine was diagnosed with a probably-terminal cancer about 18 months ago. Whilst most people would think 'fk this, I'll quit my job, chill out and travel the world while I can', he's working to the bitter end for his 4 kids because his DIS is 9x salary.
A guy at work did similar right to the bitter end. Horrible for them but he kept going and not even 2 weeks after being admitted to hospital he was dead. k this, I'll quit my job, chill out and travel the world while I can', he's working to the bitter end for his 4 kids because his DIS is 9x salary.A true gent who loved his family
Welshbeef said:
Simpo Two said:
A friend of mine was diagnosed with a probably-terminal cancer about 18 months ago. Whilst most people would think 'fk this, I'll quit my job, chill out and travel the world while I can', he's working to the bitter end for his 4 kids because his DIS is 9x salary.
A guy at work did similar right to the bitter end. Horrible for them but he kept going and not even 2 weeks after being admitted to hospital he was dead. k this, I'll quit my job, chill out and travel the world while I can', he's working to the bitter end for his 4 kids because his DIS is 9x salary.A true gent who loved his family
JulianPH said:
As a Trustee I have to say that it is incredibly rare to not follow the Expression of Wish/Nominated Beneficiary instructions unless the beneficiary is a criminal/terrorist/you know what I mean, or there is a postdated will that flies in the face of such instruction without factoring in said instructions (i.e. I leave my pension to my kids for IHT reasons and the rest of my estate, minus my IHT allowance to my partner).
As a Trustee it is far harder to justify deviating from written instructions in such matters that it is to justify such deviations.
Aside from this, sorry to hear about your mate, Simpo Two.
Agreed, that's very unpleasant.As a Trustee it is far harder to justify deviating from written instructions in such matters that it is to justify such deviations.
Aside from this, sorry to hear about your mate, Simpo Two.
As I don't have children and I'm single, my two younger siblings are the beneficiaries I've nominated. 50% each
Yeah it does but what I don’t understand is say she leaves it all to our daughter, what happens? She is only 10 so is she just going to wind up with 100k in the bank?
Also separate thing but I was wondering how she can ensure daughter gets whatever assets my wife decides. Ie if she wants to leave half the house to her or whatever, to make sure that if I remarry the new wifey doesn’t get it all. How can we make that happen, is it just a case of specifying that in the will?
We only have one child and no more will be had, so divorce / death and remarrying are the only variables really.
Also separate thing but I was wondering how she can ensure daughter gets whatever assets my wife decides. Ie if she wants to leave half the house to her or whatever, to make sure that if I remarry the new wifey doesn’t get it all. How can we make that happen, is it just a case of specifying that in the will?
We only have one child and no more will be had, so divorce / death and remarrying are the only variables really.
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