New queries, issue 4382

On the bypass

We act for a client who has several pension funds with different leading life companies. Some of them are the old retirement annuity contracts and some of them are more modern: the normal pension funds that one would expect to find. The death benefits are written in trust for our client’s wife.

That of course means no tax on his death but it does exacerbate (potentially) her own inheritance tax position.

We are aware of what are called by the pension industry spousal bypass trusts.

It seems to us that these are perfectly straightforward discretionary trusts with a wider class of beneficiary than simply a surviving wife. If we are correct it seems obvious to put the death benefits in all the funds into new separate discretionary trusts.

Can readers see any particular problems with this course of action?

And...