Throughout your working life, you’ll probably build up a substantial amount of pension wealth. While you may be relying on it to provide you with a comfortable retirement, you may also want to leave some to your loved ones when you pass away.
If you want your family to inherit some of your pension wealth, having an “expression of wish” form can be invaluable for gaining more peace of mind. Despite this, a recent study by Canada Life shows that almost three-quarters of Brits haven’t completed one.
Without putting your wishes in writing, they may not be respected when the time comes to distribute your remaining pension funds. Read on to find out why having proper documentation can help you to manage your estate.
Pensions are normally exempt from Inheritance Tax (IHT)
Your pension is one of the most important assets that you’re likely to have and may represent a significant portion of your total wealth. During your lifetime, you’ll probably invest a lot into it and carefully manage it to help it grow.
As such, it should be able to support you throughout your retirement, however you may want to enjoy it. Whether you plan to spend this time taking long foreign holidays or mastering your hobbies, your pension should be able to provide you with enough wealth throughout.
Of course, this all sounds ideal but there’s one aspect of your pension that you may not have thought about – what will happen to it when you pass away?
If you manage your wealth carefully, you may have a large amount left over when you reach the end of your life, even if you’ve enjoyed several decades of luxury.
As such, you may want to leave some of your assets to your loved ones, so they can benefit from your hard work too. This may even help them to enjoy comfortable retirements of their own!
However, if you don’t properly document your wishes before you pass away, this could pose a problem when the time comes to divide your pension wealth.
An expression of wish document can give you greater peace of mind
When you pass away, one of the responsibilities of your pension trustee or administrator is to distribute your remaining assets.
To avoid your wealth not being passed on how you would have wanted, having an expression of wish form can enable you to nominate a beneficiary for your pension assets when you pass away. There are no limits on the number of beneficiaries that you can nominate, and you can alter the document if you later change your mind.
This form can be particularly important if you have a partner who relies on your pension wealth to support their lifestyle. For example, if they chose not to work so they could instead raise your children, they might struggle to get by once you pass away.
Having the proper documentation can enable you to know that your wealth will be distributed according to your wishes when you die, giving you one less thing to worry about. If you don’t have one in place, you have no guarantee that your assets will be divided the way that you want.
Having a comprehensive will in place can give you greater peace of mind
While nobody likes to consider their own mortality, planning ahead for when you do eventually pass away can be useful. Knowing that your wishes will be respected after you’ve died can give you much greater peace of mind.
One of the best ways to ensure this is to have a comprehensive will in place that covers every aspect of your finances. This will help to ensure that your wealth goes to the people you want it to when the time comes.
Having one can also be particularly useful if you want to leave some of your wealth to a stepchild or cohabiting partner. If you pass away without a will – known as dying “intestate” – then the laws of intestacy determine how your estate is divided.
The criteria they apply usually prioritises certain family members over others, which could result in someone you want to receive your money being unable to.
If you want to put a will in place, we can signpost you to a specialist legal firm who will work with you to decide how you want your assets to be distributed. This can enable you to rest easy, knowing your loved ones won’t struggle financially after you’ve passed away.
Get in touch
If you want to know more about putting a will in place to avoid any estate issues, we can help. Email firstname.lastname@example.org or call us on 01275 462 469.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.
Bowmore Financial Planning Ltd is authorised and regulated by the FCA.