Pension Trustees Disregarding Deceased's instructions

Trusts Discussion
1

An awkward issue has cropped up in connection with an estate I am administering.

The deceased was a business owner and a divorcee. He lived with his partner for 20 years. They both had adult children by previous relationships. He left provision for his partner in his will and by her inheriting their jointly-owned house which was bought with his money (she has other pension provision). He left his business to one of his sons (who had been involved in the business since school) and split the rest of his assets between his children. His will was prepared three years before his death and, as part of the estate planning process, the deceased expressed the wish to his pension trustees - a large financial firm - to pay his pension to his children. The trustees, having taken evidence from the partner, have now decided to override the deceased’s wishes and have rejected the children’s appeal.

My concern is that, notwithstanding that provision is discretionary, the whole raison d’etre of the pension trustees is to act as the client wants (certainly that is what most clients believe, even if as advisors we understand it is not as clear cut as that) and not to second guess the wishes of their clients. In reliance on pension trustees doing their bit, clients invest substantial amounts of money and estate planning professionals construct plans which carefully balance the estate, the life assurance and the pension and their clients’ rights and obligations. If the deceased’s partner felt under-provided for, the law provides her with the right to sue for greater financial provision under the I(PFD)A 1975 but his children enjoy no corresponding right against the financial company’s decision to act act as the final arbiter of what is fair and reasonable (at least, not in the same way).

In this particular case, the effect of the trustees’ decision will be to enrich her adult children at the expense of the deceased’s own, as her life expectancy is not likely to be long due to her medical conditions. This is the last thing the deceased wanted.

Has anyone experienced a similar situation or have any views?

2

Have a look at the decided cases on the Pension Ombudsman’s site - there are examples of cases where trustee decisions have been reviewed and, in some cases, overturned. Much depends on facts - Good luck!

3

Pension trustees who completely disregard the non-binding wishes of the dead pensioner, whose lifetime rights were contractually binding, and fail to give due weight to all the factors which you set out, are in the same vulnerable position as the trustees of any trust of exposure to litigation. Actually worse potentially, because they have apparently divested themselves of the trust fund; if not an injunction quia timet should be sought. The adult chidren who have benefited are in limbo since as volunteers they are open to being divested and should be put on notice. In fact a freezing order could be sought, even without notice, for any assets in E&W currently in the hands of any potential defendant: see Chancery Guide 15.42-61 and App M.

Jack Harper