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Passing on your wealth<\/strong> Money left in your pensions can be passed on to your dependents or family tax-efficiently, depending on the type of pension it is, you nominating who you wish to receive the money (your beneficiaries) \u2014 your Will won\u2019t do this for you; and your age when you die \u2014 before or after the age of 75.<\/p>\n Passed on in certain circumstances<\/strong> If you die before age 75 and haven\u2019t accessed your pension, your beneficiaries have two years to claim your entire pot tax-free. If you\u2019re older than 75 when you die, your defined contribution pension won\u2019t be subject to Inheritance Tax; however, your beneficiaries will have to pay Income Tax at their usual rate.<\/p>\n Tax-free cash allowance <\/strong> How can you pass your pension pot through the family without Inheritance Tax?<\/strong> Prioritise pension plans <\/strong> You may even be able to move existing savings and investments into your pension plan to take them out of the Inheritance Tax net.<\/p>\n","protected":false},"excerpt":{"rendered":" A very tax-efficient solution for passing on your wealth Passing wealth through the family, for most, is an important part of their estate preservation planning process. Pension funds are typically free of Inheritance Tax provided the scheme trustees\/administrator has discretion over the payment of death benefits<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[],"_links":{"self":[{"href":"https:\/\/www.paulyoungifa.co.uk\/news\/wp-json\/wp\/v2\/posts\/3781"}],"collection":[{"href":"https:\/\/www.paulyoungifa.co.uk\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.paulyoungifa.co.uk\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.paulyoungifa.co.uk\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.paulyoungifa.co.uk\/news\/wp-json\/wp\/v2\/comments?post=3781"}],"version-history":[{"count":0,"href":"https:\/\/www.paulyoungifa.co.uk\/news\/wp-json\/wp\/v2\/posts\/3781\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.paulyoungifa.co.uk\/news\/wp-json\/wp\/v2\/media?parent=3781"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.paulyoungifa.co.uk\/news\/wp-json\/wp\/v2\/categories?post=3781"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.paulyoungifa.co.uk\/news\/wp-json\/wp\/v2\/tags?post=3781"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nAs well as supporting you through retirement, pensions can be a very tax-efficient way of passing on your wealth. You can even pass on your pension to help give a family member or dependent more money to retire with.<\/p>\n
\nDefined contribution or money purchase pension savings can be passed on in certain circumstances. These include savings you have made through a workplace defined contribution pension scheme and savings in individual plans such as Self-Invested Personal Pensions (SIPPs) or stakeholder pensions, making them very useful when it comes to Inheritance Tax.<\/p>\n
\nYou need to remember any money you take out of your pension becomes part of your estate. This means it could be subject to Inheritance Tax. This includes any of your tax-free cash allowance which you might not have spent.
\nSome older-style pensions may be inside your estate. So it\u2019s important to check if Inheritance Tax might apply your savings.<\/p>\n
\nConsider setting up a defined contribution pension if you haven\u2019t already, as this will give your beneficiaries the most flexibility.
\nLocate your old workplace pensions and weigh up the pros and cons of transferring them into one scheme.
\nThis can make things a lot easier for your beneficiaries to manage and will ensure they have access to all of your pension savings.
\nNotify your pension provider of who your beneficiaries are and keep this information up to date.
\nWhile it\u2019s not essential in order to pass along your pension, drawing up a Will can help remove any doubt when it comes to dividing your estate and respecting your wishes when you die.<\/p>\n
\nThe exemption of pensions from Inheritance Tax gives rise to several types of planning opportunities. Most obviously, if your non-pension assets (such as the cash in your Individual Savings Accounts) are likely to leave your heirs facing an Inheritance Tax bill, it may be appropriate to prioritise pension plans for your future savings.<\/p>\n