One of my children is disabled and we are in the process of setting up a 'disabled persons trust' for her via our solicitor and I am reviewing the 'Expression of Wish' form for my SIPPS.
I had planned to name her 'disabled persons trust' as one of my nominees to receive funds after my death however I read somewhere that distributions from a SIPP/PP after the death of the SIPP/PP account holder are subject to a tax charge (40%) as the distribution is to a trust and not a person.
I approached my solicitor who wouldn't comment. My IFA doesn't know. My SIPP holding company will not comment and a local accountant ( billed as a trust specialist) 'thinks' the tax charge is not made in the case of a 'disabled persons trust'.
Can anyone give me a steer on this please?
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Expression of Wish - Disabled Persons Trust?
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Re: Expression of Wish - Disabled Persons Trust?
Sobraon wrote:One of my children is disabled and we are in the process of setting up a 'disabled persons trust' for her via our solicitor and I am reviewing the 'Expression of Wish' form for my SIPPS.
I had planned to name her 'disabled persons trust' as one of my nominees to receive funds after my death however I read somewhere that distributions from a SIPP/PP after the death of the SIPP/PP account holder are subject to a tax charge (40%) as the distribution is to a trust and not a person.
I approached my solicitor who wouldn't comment. My IFA doesn't know. My SIPP holding company will not comment and a local accountant ( billed as a trust specialist) 'thinks' the tax charge is not made in the case of a 'disabled persons trust'.
Can anyone give me a steer on this please?
I think there are a few people on this board who may be able to help. Failing that, you may find Mencap helpful:
https://www.mencap.org.uk/advice-and-support/wills-and-trusts-service
RC
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Re: Expression of Wish - Disabled Persons Trust?
Thanks RC, my daughter does not have a learning disability and I had seen the Mencap service but I think its very much designed for people with a learning disability so is not appropriate for her. Thanks for your thoughts.
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Re: Expression of Wish - Disabled Persons Trust?
Sobraon wrote:Thanks RC, my daughter does not have a learning disability and I had seen the Mencap service but I think its very much designed for people with a learning disability so is not appropriate for her. Thanks for your thoughts.
I think she is either a "vulnerable person" for tax purposes or she isn't - there is no analysis of why you are vulnerable. So the analysis of what happens to a SIPP "inheritor" will not vary. The "what to do" may vary, but the tax consequences will not.
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Re: Expression of Wish - Disabled Persons Trust?
I am not sure if this is what you are thinking of - the special lump sum death benefits charge which the manual says is 45% not 40%, But in case it is and in case you can understand HMRC speak I attach a link to a page from the Pensions Tax Manual
https://www.gov.uk/hmrc-internal-manual ... /ptm073010
I confess I had thought you could only nominate individuals or a charity but somewhere in the manual it says you can nominate anyone including trustees as long as the scheme rules allow it.
The tax treatment seems weird to me - why should you pay income tax on a lump sum death benefit?
Anyway I hope that helps.
https://www.gov.uk/hmrc-internal-manual ... /ptm073010
I confess I had thought you could only nominate individuals or a charity but somewhere in the manual it says you can nominate anyone including trustees as long as the scheme rules allow it.
The tax treatment seems weird to me - why should you pay income tax on a lump sum death benefit?
Anyway I hope that helps.
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Re: Expression of Wish - Disabled Persons Trust?
Many thanks Seasider, not sure I understand the implications of the HMRC page as I will need to think carefully about it.
Surprised this seems to have bypassed my solicitor (a trust specialist), my accountant ( advertises themselves as a trust specialists) and the pension company (who accepts trusts on the beneficiary form).
So thanks again everyone for your thoughts.
Surprised this seems to have bypassed my solicitor (a trust specialist), my accountant ( advertises themselves as a trust specialists) and the pension company (who accepts trusts on the beneficiary form).
So thanks again everyone for your thoughts.
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