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Spousal Bypass Trusts
Spousal Bypass Trusts protect your pension death benefits from being subject to Inheritance Tax on the death of a surviving spouse or civil partner.
- If the pension death benefits are paid directly into the Trust, your beneficiaries could get access to all of your pension death benefits without losing some of it through Inheritance Taxes, as it does not form part of their estate.
- The Trust offers flexibility and control. You can add or remove beneficiaries and change terms whenever you like.
- You can instruct trustees to make payments to chosen beneficiaries.
- On the event of your death, the Trust would be expected to follow your instructions and act in the best interests of your chosen beneficiaries.
This Trust is established separately from your pension scheme with a small cash sum, which should be retained with the trust document.
Inheritance Tax may be charged on the 10th anniversary since the death benefit was paid into the trust, if the overall value exceeds the nil rate band at the time.