Beneficiary of SIPP query
Amy
Member
Good morning, we have a client who passed away a year ago and he had named his wife as sole beneficiary on his SIPP. Wife has lost capacity and son has recently gained POA - taken best part of the year. We were looking to move into beneficiary drawdown with the same provider but as POA involved, no beneficiaries can be named on proposed beneficiary drawdown plan for wife. Have been informed that wife is now in ill health so not sure on our options for moving at all now.
Am I correct in thinking that if this remains in the late husband's name and his wife passes away within at the next year, it will be treated as falling into her estate by way of him naming her a sole beneficiary on his SIPP and him dying before her? At which point it would be payable as a lump sum taxed at 45% under the terms of her Will?
Sorry if this isn't worded very well!
Comments
Hi
You really need to double check with the scheme rules and what they are willing to do. If they have already decided they are giving it to her she has become entitled to it so can't be given up. I suspect they would treat it as her death in the scheme. It is highly unlikely that they will just let the plan run in the members name with no one to make decisions and look after it.
It will be in her estate as most pensions will be in the estate but I suspect technically it will be disposed of under the schemes discretion and scheme rules. So not necessarily a lump sum to estate.
Is the fact no nomination can be made actually a big deal in the scheme of things?
Nominations are important for two reasons - helping schemes exercise discretion and the options available to the beneficiaries chosen.
Suspect that the latter point is what is of concern and it shouldn't' be. If she dies without dependants then any beneficiary chosen by the scheme can receive a drawdown. Where there are no dependants and no nominees schemes can offer income death benefits to anyone they choose.
In the helping scheme to exercise discretion, while the PofA can't make a testamentary disposition i.e. make a nomination most schemes should listen to what a PofAs views were on what the person who died would have wanted as part f the process of exercising their discretion.
Thanks Les, this is really helpful and much appreciated!