Control using bypass trust

I have some clients with more complex family situations, where control over who benefits is deemed essential. In these situations, clients may want to consider bypass trusts, from which the surviving spouse and future generations can benefit.

This can ensure that the pension proceeds are kept within the family.

As a financial planner, it is becoming more apparent that we need to involve and educate beneficiaries as to how this could work for them, and ensure that they understand the tax implications once they inherit the pension, to avoid unnecessary mistakes.

This area is full of intricacies, of which this article barely scrapes the surface - I am aware I have not had scope to cover taxation of pensions benefits, Lifetime Allowance, or any other options here.

But, as you can see, there are many considerations and choices to make when planning how your clients might care for loved ones after they have died. However, with the right open discussion and a good financial plan, any family scenario can be catered for.

It is certainly something that my clients very much value discussing sooner rather than later, and as financial planners, we can look at the entire financial picture and help make sense of complex and sometimes sensitive requirements.

Professional advice is crucial to helping clients care for their loved ones as part of a long-term financial plan. So even if they have not asked the question yet, it is worth discussing the pension nomination form with them. 

Their families will want you to ask.

Lorraine Denton is a chartered financial planner for Punter Southall Wealth