The importance of reviewing your expression of wishes

It is a strange and difficult time and our lives are still being consumed by talks of Coronavirus and the possibility of a second wave. It is understandable that certain topics are not at the front of people’s minds. Sadly, and whilst trying to be completely realistic, some unexpected and difficult conversations may need to be had during this time. However, whilst it may feel slightly uncomfortable at first, having certain conversations to consider and plan for certain events early enough, could save even more difficult and harder conversations from being had further down the line.

Inheritance planning and making a Will are, of course key, and in our recent blog we spoke about the importance of ensuring your Will reflects any changes to your circumstances. However, what we want to cover here is the importance of your Expression of Wish in relation to your pension.

An Expression of Wish provides guidance to pension scheme administrators/trustees as to who to consider as recipients of any death benefits. Once the scheme administrator/trustees have made a decision as to who is to benefit, the recipient, whether they opt for a pension or a lump sum, takes complete control as to how they use the pension fund during their lifetime and who, in turn, they may wish to benefit from the fund on their subsequent death.

As circumstances change through life, you should be making sure that, like your Will, any Expressions of Wish in existence should also reflect any changes.

In the five years since the introduction of pension freedoms, the desire by some to make an Expression of Wish all-encompassing has led to unnecessary complexity and, in some instances, increased the risk of potential charges to inheritance tax.

We have laid out three simple rules when it comes to an expression of wish:

Ensure it is reviewed regularly and updated if required. There is nothing more problematic than an Expression of Wish that has not been updated to cover a change in circumstance. One not uncommon example is where the member marries for a second time but has nominated their children from their first marriage. It may be the case that it is still the member’s wish their children benefit, but one can easily see if the Expression of Wish was not updated after marriage it will be open to challenge. This can cause family friction and delays.

Keep it simple. Trying to cover a multitude of scenarios does not normally bode well. The current wording on most forms allows for alternative nominees should a main nominee predecease the member or not wish to take up all or part of the benefit. The wording also ensures that any beneficiary has the option to taking a pension rather than a lump sum. This should ensure the form provides maximum flexibility without having to be over complicated.

Use the pensions providers own Expression of Wish form. It has been drafted in line with their scheme rules and, if there is an error in the completion of the form, it is more likely to be picked up by the pension provider on receipt. If the providers pro forma is not seen as being sufficient, then separate legal advice should be taken. At what would already be a difficult time, the last thing you want is family disagreements and debates around who gets what and when.

If you think your current Expression of Wish form does not reflect your current wishes, please contact your Prosperis adviser to get this updated.