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Protect Your Will – There Only Needs To Be One Reason Why

When it comes to pensions and trusts, there can be a lot of unanswered questions at a time where you need things to be as straightforward and simple as possible.
Our team are always willing to help you, and so have answered some frequent questions regarding pensions and trusts:

Can you place Protected Funds under trust?
Yes. This may be a solution for an IHT problem that would otherwise arise for protected rights. Where there is no surviving spouse or civil partner, a protected rights fund will be paid as a lump sum. This lump sum must be paid in accordance with any direction given by the member to the scheme administrator in writing, or to the member’s estate if the member has not left written directions. This is specified in the legislation around protected rights. The lump sum will clearly form part of the estate for IHT purposes if no directions have been left.

With regards to a Pension Lump Sum, what type of Trust would you use?
If you were wanting to retain favourable inheritance tax treatment, a pension trust will normally be discretionary in nature. But there are more ways of using trusts alongside pension lump sum death benefits: using an integrated trust, or considering a pilot trust.

What is the Perpetuity Period of a Pension Trust?
This depends upon a number of factors. The perpetuity period is 125 years for an integrated trust established on or after 6 April 2010. This is the same for the perpetuity period of a pilot trust.

What would be the amount of Inheritance Tax Payable?
Generally, the periodic charge will not exceed 66% of the value of the trust fund, but the calculation is complex. The trust fund has a relevant two year period when any property leaves the trust, and if the funds are not disposed of in that period then it will be subject to a proportionate charge based on an appropriate fraction of the ‘effective rate’ – but this would also generally not exceed 6%.

Will Protect know that making the most of your estate takes careful and diligent financial planning, so we offer financial expertise to make sure your estate provides your desired recipients with as much income as you had hoped.
By using financial tools such as trusts, where appropriate, we can ensure that you and your family get the maximum financial benefits. We will manage your estate, and use our experience in the financial sector to mitigate inheritance tax and make sure your money ends up with your loved ones instead of in the hands of the Government.
If you have any more questions, or have an enquiry, please do not hesitate to get in touch with our teams of professionals on 0845 8948 441.
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