If you would like to the option for your loved ones to receive your pension fund after death and that it is safeguarded in circumstances such as bankruptcy or divorce of a family member, you should consider setting up a trust* specifically designed to receive death benefits from pension schemes.

Any pensions you may have are designed to provide an income in retirement but can also provide valuable benefits for your dependants should you die. This can represent a significant sum of money. You may have chosen to have these benefits paid to your surviving spouse or civil partner. However, the resulting proceeds would then form part of their estate.

On the subsequent death of the spouse or civil partner this could potentially create or increase a liability to inheritance tax (IHT) which could result in a loss of up to 40% in value of the remaining benefits.

We can offer you access to our exclusive Legacy Preservation Trust.

The Legacy Preservation Trust is specifically set up to avoid some of the financial problems that can happen after your death. It may also provide future IHT savings.

However, note that from April 2027 most pension funds will fall into the estate and payment into trust on death will not prevent an immediate IHT liability. If the death is after the age of 75 then the beneficiaries could also potentially face income tax.

This useful tool is not suitable for everyone so a thorough review of your circumstances would be required.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.

*Please note that Trusts are not regulated by the Financial Conduct Authority.