IHTM17084 - Claim on general power to dispose of death benefits: letter of wishes

A letter of wishes is different from a binding nomination ( IHTM17083). A letter of wishes records what the deceased would like to happen with the death benefits ( IHTM17030) and does not bind the trustees of the pension scheme to follow the deceased’s wishes. There is therefore no claim for the death benefits to form part of the deceased’s estate ( IHTM04029) under IHTA84/S5 (2).

The crucial point is whether or not the deceased could bind the trustees with a nomination. Many pension schemes and policies provide a form that is called a nomination, but which usually goes on to say that the trustees are not bound to follow the deceased’s wishes. If the deceased signed such a form they have signed a letter of wishes and not a binding nomination.

If the personal representatives ( IHTM05012) have answered ‘yes’ to question 11 on the form IHT409 ( IHTM10035) but the trustees of the pension scheme could choose who received the lump sum the personal representatives should fill in

• the name of the pension scheme or title of the personal pension policy
• whether the scheme/policy is approved ( IHTM17020) for income tax purposes
• the name of the person who received the lump sum payment and their relationship to the deceased.
• say that the payment was made at the trustee’s discretion

and

• not include the amount of the lump sum in box 15 or the IHT400 ( IHTM10021).