Hi, I run a small legal charity and most of my clients have straight forward legal issues but I’m helping a young mum who is receiving end of life care. She has a death in service benefit and wants to nominate her children (currently 3 and 6) to benefit when they are 25. The nomination form doesn’t allow for her to stipulate the age of benefitting so I’m assuming it amounts to a bare trust. Is there a trust form that can be used alongside the nomination form enabling this young mum’s wishes to be followed. If there is can somebody kindly email one to me at mkirby@legacare.org.
Thanks in anticipation of any guidance.
I often look at this from the pension administrator side.
Standard practice is that the children’s guardians are asked to set up a bare trust following the insured’s death. The pension trustee will usually want to approve this (just to check that it is indeed a bare trust) and then will pay out to the bare trust trustees.
You could of course prepare the bare trust in anticipation but there is no need to append it to the nomination.
Check first that the DIS rules permit payment to a trust - not all do. Setting up a pilot trust is worth investigating given the mother’s intention to ensure the children cannot access the money until age 25. She would then need to complete her nomination (aka Expression of Wish) form asking for the DIS to be paid 100% to the trust.
Alternatively, she could ask for 100% of the DIS to be paid to her personal representatives - in which case a valid, appropriately worded and up to date will is, of course, essential. If payment is at the discretion of the DIS trustees it will, under current legislation, remain free of IHT.
It is well worth a word with the employer to check how the trustees might view either of the above (and indeed, the employer might be the trustee of a DIS scheme).