I act for an estate where a lady died leaving 3 minor children. The pension company said they will pay the pension proceeds to the executrix of the estate, who is a US national.
For purposes of FACTA the US executrix wants to retire as trustee appointing me and another UK party as trustee for the trust. The issue is, I can’t see how I can draft a Deed of Retirement and Appointment as I have no Bare Trust deed or documentation to refer to in the Deed stating who the actual trustee is.
I am told the pension does not form part of the estate as it is held in trust, and the trustees of the pension policy pay out the monies to the representative. But legally surely, the money isn’t going to the “estate” so I can’t refer to the Will in the DoA&R as this woulnd’t be legally correct.
The only thing I can think of is to draft a bare trust Deed, and then refer in my DoA&R to the bare trust but i’m not sure that really solves the issue. Does anyone have any suggestions?
Presumably the deceased left no letter of wishes with the pension company? I’m wondering why the pension company cannot be pragmatic and pay the funds to the trustees of a bare trust (i.e. you and another UK party) in favour of the children. Sounds like anything involving a US executrix will be a complete pain.
No she didn’t. Her husband agreed the monies should go to her minor children. And the pension company are looking to pay the monies to the executrix of the estate, who is US resident.
Happy for you to call me if you want Christina. May have some ideas 01252 718638
The pension scheme deed will usually be the “document”, with the pension trustees using their powers under that document to appoint the death benefit to the minor children. That is, of course, on the assumption that they have such a power. If not, and they can only pay to the executor, it may be the case that the executor then pays to the intended trustees.
Depending upon the circumstances, it might be sufficient for the intended trustees to execute a declaration of trust over those monies, or for the husband to enter into a deed of variation setting up such a trust.
More investigation will be required to identify the appropriate way forward.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
I believe it’s fairly common for the trustees of the scheme to pay out to the executor of an estate - it should be stated (but otherwise would be implied) that the executor holds the funds on the residuary trusts of the estate.
I agree it’s a bit weird when you try to analyse it. To my mind, the executor is either holding the funds as an addition to any residuary will trust or on a separate settlement on identical terms.
Either way, the funds are not part of the “estate” for inheritance tax provided the pension trustees had a discretion in the first place.