When a loved one passes away, managing what happens to their money might not be at the top of your priority list but it’s an important process that you will eventually need to go through. Although you will be dealing with emotional turmoil and upset, you may find yourself in the position where you will need access to the deceased’s investments. In this article, what happens to my Sipp when I die, we take a look at the process and steps involved.
Free Initial Telephone Discussion
For a free initial discussion on how we can help you with the legal aspects of gaining access to your loved one’s investments when he or she dies, get in touch with us today. We will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help guide you through the whole process and also help you avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or complete our online enquiry form and a member of the team will get back to you.
What steps to take when someone dies
In addition to dealing with the funeral arrangements, there are a number of steps that need to be taken before you can deal with the deceased’s financial affairs:
- You should register the death within 5 days. By doing this you will obtain a death certificate. This is an important document that you must keep safe as you will need the original in order to gain access to the deceased’s bank accounts.
- If the deceased left a Will, an executor will have been named. This is the person responsible for handling the estate of the deceased. Once the executor has the original copies of the Will and the death certificate, they can apply for probate. If someone dies without a Will, the application process is the same, but you’ll get ‘letters of administration’ rather than a ‘grant of probate’.
- You will need to estimate any inheritance tax liability and notify HMRC of the same. We can advise on this.
- Once you have the Will, death certificate, and grant of probate, you are then in a position to notify the banks, utility and insurance companies.
What happens to my Sipp when I die?
Like all personal pensions, a SIPP is a form of money purchase scheme and follows the same rules in the event of your death. At some stage during the life of your SIPP, you will need to nominate beneficiaries who you would like to receive your pension benefits after your death. You can nominate anyone you like such as family and friends or even charities. If you want to select a combination of people, you can also allocate a proportion of your SIPP to each beneficiary. It’s important you inform your SIPP provider of who you would like to nominate as beneficiaries using an expression of wishes form and that this is kept up to date should you want to make any changes. The death benefits can either be paid to your beneficiaries as a lump sum or used as an ongoing pension to provide an income and benefit from leaving the money invested in a tax-efficient wrapper.
What is the tax treatment of my SIPP when I die?
One of the advantages of a Self-invested personal pension (SIPP) is the tax advantages on your death. Death benefits are normally paid without incurring inheritance tax and if you die before age 75, there is normally no income tax liability. If you die after the age of 75, the death benefits will be subject to income tax at the recipient’s marginal rate.
What happens to my SIPP if I die with no beneficiaries?
An expression of wishes form is not a legally binding document, it is more of a guide to help SIPP pension scheme administrators and trustees choose beneficiaries on the death of an individual.
If you die having not completed any expression of wishes, trustees will usually still look to pay out any SIPP pension death benefits to living dependents in the first instance.
If there are no dependents the scheme administrators have the power to nominate any other individual or entity (a charity, for example) to receive these benefits. This is why it’s very important to maintain an up to date expression of wishes document.
What happens to a SIPP on the death of a beneficiary?
A beneficiary of your SIPP death benefit can also complete their own expression of wishes form and nominate their own beneficiaries. If your nominated beneficiary dies while still receiving a pension from your SIPP then these benefits are cascaded down to their beneficiaries.
This process continues until there are no more funds left within the SIPP pension.
What happens to my SIPP if I die before retirement?
If death occurs before your chosen retirement age and your SIPP has not yet been drawn down for income purposes, the fund can be passed on to your beneficiaries free of any income tax as long as the SIPP death benefits are paid out within 2 years.
How we can help
We have a proven track-record of helping clients deal with probate matters. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact our Wills and Probate Solicitors
It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of guiding you through the often emotional process of probate in a sensitive and supportive manner and help ensure you achieve a positive outcome.
To speak to our Wills and Probate solicitors today, simply call us on 0345 901 0445, or allow a member of the team to get back to you by filling in our online enquiry form. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
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