Pension planning: why your Will may need a health check

For many years, pensions have been one of the most tax-efficient ways to pass wealth between generations. However, significant changes are on the horizon which could have a major impact on estate planning and inheritance tax.

From 6 April 2027, most unused pension funds and pension death benefits are expected to form part of a person’s estate for inheritance tax purposes.

This represents one of the most significant changes to private client planning in recent years and could affect families who previously considered pension wealth to sit entirely outside the inheritance tax regime.

For some individuals, this may mean that estates which currently fall below the inheritance tax threshold could become liable to tax. For others, it may increase an existing inheritance tax bill.

The changes are likely to be particularly relevant for those who have built up substantial pension funds or who have deliberately preserved pension assets as part of their succession planning.

Importantly, these changes highlight the need to review your wider estate planning. Many people update their Wills but forget to review pension nomination forms.

However, pension nominations, your Will and any trusts, should work together as part of a coherent estate plan.

The proposed reforms also place greater responsibility on personal representatives when administering estates, potentially increasing the complexity of the probate process and creating additional reporting obligations.

The good news is that there is still time to review your arrangements. By taking advice now, individuals can consider whether their existing Will, pension nominations and lifetime planning remain appropriate in light of the forthcoming changes.

Estate planning should never be viewed as a one-off exercise. As tax rules evolve, it is important to ensure that your plans continue to protect your family, reflect your wishes and minimise unnecessary tax wherever possible.

How can Morr & Co help?

If you have any questions or would like any further information on the content of this article, please do not hesitate to contact our Private Client team, who will be happy to help. Or email info@morrlaw.com or call us on 0333 038 9100 and one of our team will be happy to assist.

Disclaimer
Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.