A died intestate.
B, the surviving spouse, inherited part (80%) of A’s SIPP.
B died within one year of the death of A (and prior to issue of LOA to A’s estate).
A’s SIPP remains with the same asset holder. No action has yet been taken relating to this.
In terms of applying for LOA to B’s estate, does the value of A’s SIPP which B has inherited form part of B’s estate for IHT purposes? Or, is the value still exempt in terms of IHT?
I should be grateful for your comments.
On the assumption that the pension trustees had ultimate discretion in respect to the SIPP and were only intending to exercise that discretion in B’s favour, but had not actually done so prior to B’s death, I would take the view that no part of the SIPP vested in B and is therefore not part of their estate for IHT or succession purposes. If 80% was actually paid out to B and therefore left the pension wrapper, then I believe it would be part of B’s estate for IHT and succession.
@chrisg has correctly described the most common situation. I suggest you check with the SIPP Operator to find out whether the Operator (or trustees) indeed have discretion and, if so, whether any formal appointment had been made. If not, the monies are NOT part of B’s estate.
Watch the timing - any distribution to a different beneficiary must be made within 2 years of A’s death to be IHT free - sounds like that could be close…