DEATH IN SERVICE

Arrangements for university and medical staff

to potentially save Inheritance Tax

With the NHS or University Superannuation Schemes a multiple of your superannuable salary will be paid out should you die whilst you are employed. (NHS 2 times; USS 3 times)

This sum will normally be paid to your spouse.

With the NHS or University Superannuation Schemes a multiple of your superannuable salary will be paid out should you die whilst you are employed. (NHS 2 times; USS 3 times)

It would then form part of your spouse’s estate

bringing it into “the net” for Inheritance Tax and

Long Term Care “means testing”.

With the NHS or University Superannuation Schemes a multiple of your superannuable salary will be paid out should you die whilst you are employed. (NHS 2 times; USS 3 times)

This sum will normally be paid to your spouse.

With the NHS or University Superannuation Schemes a multiple of your superannuable salary will be paid out should you die whilst you are employed. (NHS 2 times; USS 3 times)

This sum will normally be paid to your spouse.

It would then form part of your spouse’s estatebringing it into “the net” for Inheritance Tax andLong Term Care “means testing”.

THE SOLUTION?

Establish a trust during your lifetime which is designed

specifically to receive the capital sum.

On your death, the capital sum is paidinto this trust which means that:

Establish a trust during your lifetime which is designed specifically to receive the capital sum.

It is not added to your spouse’s estate for inheritance Tax purposes

Establish a trust during your lifetime which is designed specifically to receive the capital sum.

On your death, the capital sum is paid into this trust which means that:

It will not be assessed as capital belonging to your spouse for the purposes of a long term care means test

Establish a trust during your lifetime which is designed specifically to receive the capital sum.

On your death, the capital sum is paid into this trust which means that:

It is not added to your spouse’s estate for inheritance Tax purposes

Your spouse still has access to and control of income and /or capital from the trust.

Establish a trust during your lifetime which is designed specifically to receive the capital sum.

On your death, the capital sum is paid into this trust which means that:

It is not added to your spouse’s estate for inheritance Tax purposes

It will not be assessed as capital belonging to your spouse for the purposes of a long term care means test

EXAMPLE IN PRACTICE

Inheritance Tax is not normally charged on gifts between spouses.This tax is charged when a person dies and transfers chargeable assets to persons other than the spouse in excess of a ‘Nil Rate Band’ currently £312,000 each.

So: £1,000,000 - £624,000 = £376,000 * 40% = £150,400

House/personal £ 650,000

Investments £ 150,000

Death in Service benefit

£ 200,000

Total Joint Estate £1M

Inheritance Tax £150,400

House/personal £ 650,000

Investments £ 150,000

Death in Service benefit: trust

£0

Total Joint Estate £800,000

Inheritance Tax £70,400

The trust removes the Death in Service lump sum from your estate; this means that:

£200,000 is removed at a tax rate of 40% giving a potential tax saving of £80,000.

Resulting in the potential Inheritance Tax being reduced to £70,400.

Death in Service

What will this cost me?…Nothing but a little time!

1. Time to complete the necessary documentation (University Superannuation Scheme and the National Health Service

Pension Scheme in Scotland and England have different procedures.)

2. Attach £10 note to give the trust ‘substance’ and

3. Copy the documents to your pension scheme with a specific covering letter.

FOR FURTHER INFORMATION CONTACT:Andrew WalkerSenior Partner

The St. James’s Place Partnership20 Carlton Place

Aberdeen AB15 4BQ

Telephone: 01 224 647 102Mobile: 07 900 284 729

Email: andrew.walker@sjpp.co.uk