We have a case where the settlor has lost capacity and has 2 trusts and a registered pension. I understand that without the specific power granted to the attorney, the attorney cannot gift monies/assets away from the donor. The attorney accepts this. However, neither of the trusts or the pension scheme have any nomination or expression of wish attached and the attorneys would like to submit nominations to indicate the donors wishes.
On the understanding that these are all essentially discretionary trusts, and a nomination or expression of wish is just that - a wish, I can see no reason why a POA cannot make a nomination.
The only concern that I have is that the nomination could be seen as something more that an indication to the trustees of where to consider passing benefits and could be seen as a strong push, so just short of an absolute direction.
My view is that any nomination is not binding on the trustees and under their normal duty or care and due diligence I would have expected any nominations to be accepted as just that and then the trustees act in accordance with their duties.
I have had different responses from the providers (their draft trust documents) as to whether they will accept this nomination of not.
I cannot find anything definitive on this subject and woudl be interested in any views you may all have.
Where the nomination is just an expression of wishes, the trustee could and probably should take it into account but not necessarily as an expression of the settlor’s wishes and not with the weight that the settlor’s personal wishes would carry.
Where the beneficiary is only a beneficiary because of the nomination (some insurance trust deeds include nominated persons as a separate class of discretionary beneficiaries) I would want to look into it a lot more carefully.
Mindful that in many instances pension rights might be the individual’s most valuable asset (unless the own a house in London or the South East) I would be inclined to suggest that any nomination should only be made following an application to the Court of Protection.
Whilst I agree with Andrew’s posting that the pension trustees should treat a nomination by an attorney with caution, once details are set up on the pension trustee’s system, will it be apparent that it was not made by the pension member?
However, should it be possible for any individual to deal with what may be their most significant asset in such an informal way as usually applied to a pension fund nomination?
There is no formality required, other than a signature, and few individuals seek advice, unlike with a will. I sought to persuade the Law Commission that, when reviewing the requirements for a valid will, it might bring within that consultation questions in relation to the nomination of pension funds. Regrettably, as such nominations are not subject to the Wills Act 1837 the Law Comm declined to consider the issue. Having canvassed some pension trustees, there was a mixed reception to any requirement that pension members be advised before making a nomination, and also to formalising the nature of any nomination, in any way similar to the rigour one might expect when making a will. Now that the cap on pension fund contributions, etc. is to be removed, might this be an aspect worthy of review?
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals