IHTM17071 - Pensions: IHT charges: assignment of death benefits

The right to a death benefit from a pension scheme is often transferred irrevocably to a discretionary trust. Many pension providers have standard documents to put this into effect. This type of transfer or assignment is a lifetime transfer at the date of transfer and can result in a lifetime transfer of value if the scheme member is in ill-health at the time.

Not all cases though involve irrevocable transfers. Where a trust is:

• only one of the potential beneficiaries, even if nominated in a letter of wishes, and
• the pension provider retains the right to make a payment at its discretion

there is no lifetime transfer.

It is also possible that an irrevocable nomination could be made in favour of other beneficiaries. However, this is less common because a beneficiary who is an individual may unexpectedly pre-decease the pension scheme member.

Details of any assignment of death benefits within the 2 years before a death should be included on form IHT409 (IHTM17015).