UK: Do Not Inadvertently Hand Your Pension Or Insurance Benefit To Your Ex-Spouse By Failing To Update Pension And Insurance Documents

Family life has changed considerably in recent years. High levels of divorce produce blended and extended families which impact on many situations and circumstances in life. Far greater numbers of individuals own real estate abroad, often relocating in their retirement years to a kinder climate.

The upset of divorce overturns the life of many people. It is not surprising that some important aspects are often overlooked. Giambrone & Partners experienced inheritance lawyers suggest regular reviews of critical issues to ensure that any life-changing events, such as the birth of a child, divorce and death of a beneficiary have been accounted for and all appropriate organisations such as pension and insurance providers are aware of your wishes.

Gonzalo Butori, a partner, commented "many people are unaware of the variations in the way pension funds are dealt with when the intended recipient dies. There is a presumption by some people that their current spouse will automatically receive the benefit but that is not always the case. The trustees of a pension fund have control over who receives the benefit of the pension fund in the event of the death of the person whose fund it is, depending on the way the trust has been set up." Gonzalo further commented "similarly, the beneficiary of insurance policies must be updated, or an ex-spouse may benefit, if you named your spouse as the beneficiary if you do not update the information after divorce, this is often overlooked; such an oversight could have a devastating impact the current spouse.

Giambrone & Partners inheritance lawyers recognise that the vast majority of people do not want to leave their relatives and beneficiaries avoidable problems to unravel at a difficult time and there are many considerations that should be addressed. One of the most neglected actions, very common to many, is the failure to make a will or update an old will.

We explain the most significant managed assets and relevant legal documents that should be updated:

Pensions

A pension fund is an important part of your assets but it cannot be incorporated in a will. Depending on the type of pension fund you can propose the recipient of the benefits of your pension in the event of your death through an Expression of Wishes. This is a document that provides guidance to the trustees of a pension scheme as to how the member would like their death benefits to be paid out, in what proportion, and under what circumstances. In order that your wishes are properly recorded, you should complete an Expression of Wishes form provided by your pension scheme and keep it up to date.

It should be noted that the trustees will take your expression of wishes into account but they have discretion, as far as your pension fund is concerned, as to whom they will pay the benefits. More often than not a person named as the beneficiary is respected when distributing the death benefit.

The structure of a pension fund is important and that beneficiaries are nominated in accordance with the rules of the scheme to ensure that the trustees are not able to keep the remainder of your pension fund on your death. The best way to protect the interests of your beneficiaries is to have a clear understanding of the rules governing the pension fund. The Financial Conduct Authority (FCA) has warned in the Financial Times Advisor that it has observed: "We have seen cases of firms seriously mismanaging trusts with unsuitable investments made by trustees." The FCA warns consumers to seek independent legal advice.

The trustees may pay out to children still in full-time education or those with mental or physical impairments. Also, anyone who is financially dependent on the deceased such as an unmarried partner may receive the benefit.

One extremely significant factor, as mentioned above, is to keep the information up-to-date. Your Expression of Wishes can be varied at any time, and it is a good idea to review it regularly to ensure that it still reflects your wishes.

Insurance

Insurance policies have similar provisions as far as the beneficiaries are concerned to those of pension schemes. Clear unequivocal instructions as to who the beneficiary should be must be made. Our lawyers reiterate the importance of reviewing all information on a regular basis, should you wish to alter the named beneficiary do so as soon as you have made the decision.

Wills

If you own foreign fixed assets in the shape of real estate it is extremely important to make a will, particularly if you live permanently in your overseas property. Giambrone & Partners inheritance lawyers have years of experience in guiding British nationals in how to ensure that their bequests are received by their intended beneficiaries. Clients with overseas assets are advised to make a will under the jurisdiction of England & Wales enshrining all their wishes for the disposal of their estate and then make another will under the jurisdiction of their overseas property, clearly stating that they wish their estate to be dealt with under the jurisdiction of England and Wales in accordance with your English will.

This will allow you to dispose of your assets in any way you choose and to whom you choose, as opposed to be tied to foreign laws of succession that will apply if you are resident in your overseas property and die intestate. Most European jurisdictions have laws of succession that are based on forced heirship, whereby your estate can only be inherited by your relatives who will receive designated portions of the estate in strict order depending on the degree of proximity to the deceased. There is no provision for an unmarried partner, step-children, friends or charities.

Whilst many people elect to keep the provisions of their will private speaking only to their executors about their bequests etc. if the estate is held in more than one jurisdiction it may be better to be transparent, so that your beneficiaries are fully aware of your intentions to avoid any confusion. Recently, the situation arising out of the death of Lisa-Marie Presley where her mother, Priscilla Presley and her mother's manager were removed as executors of her estate in favour of Riley and Benjamin Keough, Lisa Marie's children (Benjamin pre-deceased his mother) was not only a totally unexpected surprise to Priscilla Presley but has now caused a legal challenge to the will.

In order to be sure that all your wishes are clearly understood and will be adhered our inheritance lawyers can provide comprehensive legal advice.

Gonzalo Butori advises both private and commercial clients in a wide range of matters, both contentious and non-contentious. He advises private clients on wealth management, alternative dispute resolution and family law matters.

Gonzalo is well regarded for his extensive knowledge and expertise when advising foreign clients with regard to their financial interests, mainly relating to estate management issues, together with probate in both Europe and England & Wales.

He has assisted in a number of cross-border transactions involving various EU jurisdictions and achieved successful results. He also specialises in the conflict of laws and jurisdiction.

Gonzalo regularly advises international clients in connection with family and inheritance-related cross-border matters. Throughout his experience, he has dealt with high-value and complex matters both contested and non-contested which have given him valuable exposure and experience.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.