Death in service payout – Anyone got any advice?

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  • Death in service payout – Anyone got any advice?
  • Premier Icon BlobOnAStick
    Subscriber

    Hi,

    I’m looking for advice for a close friend of mine who has recently lost her partner…… She has tried a number of solicitors but none seem to have much advice to offer.

    The partner had death in service cover through the pension arrangements at his work, he had no immediate family (mother, father, brothers or sisters) but does have a 5-year old daughter by with a previous girlfriend. He did not leave a will, which is no big issue as he had no real assets to speak of. He named my friend specifically as the beneficiary on the forms (you can’t name a minor as a beneficiary as far as I’m aware), as they were effectively common-law wife/husband (they were engaged to be married).

    The solicitors acting for the employer have written to my friend “seeking to establish the dynamics of [my friend’s partner’s] family and relationships” in order to “consider the needs of all interested parties under the policy”. No maintenance was being paid to the mother of the child – she didn’t want anything to do with him.

    The issue is that if the solicitors contact the mother of the child then an unholy row is likely to break out which may result in such a legal battle that wipes out the benefit payable. Are the employer’s solicitors within their right to be doing this? Shouldn’t the payout just go directly as indicated on the forms that were filled out?

    Premier Icon scotroutes
    Subscriber

    As I understand it the Trustees of any pension scheme will consider all options and use the named beneficiary as guidance.

    Rich_s
    Member

    AFAIK he would have filled in an “Expression of wishes” form when he set it up. This is used as guidance by the company/trustees and does not guarantee the payout.

    Premier Icon theotherjonv
    Subscriber

    ^ This. It’s only an expression of preference, it’s up to the trustees to decide. In ‘clear cut’ cases then the nomination is effectively an instruction but sounds like the above isn’t clear cut – as an impassive observer (but NAL) I can see that the daughter might have a reason to benefit and if she can’t because of age then the mother might need to instead.

    Maybe if it comes to it, your friend can express her reservations that giving the money to the mother may result in it being squandered and have it held in trust until the daughter is old enough? Again IANAL, but as the ex has had no maintenenace / support then I don’t see how his death has affected that situation (ie payments won’t now cease) so I’d see it unfair that the ex that has had nothing to do with him benefits in any way.

    Premier Icon Rubber_Buccaneer
    Subscriber

    As said it’s payable at the trustees discretion and I doubt any solicitors are involved. There is also little chance of getting caught up in any legal battle without starting it. Give the trustees the information they request then they make their decision based on this plus the deceased’s expression of wish.

    Premier Icon BlobOnAStick
    Subscriber

    This is why I love STW – there’s always someone who knows something about anything!

    Thanks very much folks – I think what may have caused a bit of worry is that it appears that the trustees of the scheme are using a firm of solicitors to communicate and the letter comes across very formally.

    It appears an honest statement of the facts is all that is required…..

    julzm
    Member

    Death in service benefits are normally part of a discretionary pension scheme, run by trustees. The purpose of such a scheme is to ensure that it runs for the benefit of all possible beneficiaries. Therefore the trustees has a duty to ensure that they have sought information on all possible beneficiaries prior to paying out. They have up to two years to decide.

    A long time ago, part of my job was deciding who we paid out to in such cases. I think you might have a problem not having this paid out to the child, although it could be paid out under trust to the child, whereby they can access income but not the absolute capital until they reach the age of majority. Obviously not all information is available here but it should be made available to the trustees.

    Also, there is no issue with naming a minor on an expression of wish form.

    wilburt
    Member

    As above my kids are named as beneficiaries of any death in service payments due should I pop off.

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