Making wishes a reality for your client's estate planning

Published 9 September 2025

As you are no doubt aware, inheritance tax (IHT) on pensions is due to change. The Chancellor, Rachel; Reeves, confirmed this last autumn and in July further clarity was given in a new paper, Reforming inheritance tax – unused pension funds and death benefits.

Pensions have always sat outside your normal client estate planning. Private clients lawyers will know that, even when you establish wills for your clients, they will not cover their pension.

For this reason, and because some unfortunate clients will die before retirement, it is vital that every individual with a pension/s has an expression of wish form (also known as a nomination of beneficiary form) for each plan, to be sure that their loved ones benefit from their pension planning as they would have wished.
Given the topicality, we decided a refresher to the wider context and why collaborative planning is important might be in order.

Why don’t wills cover pensions?

Pensions are trusts: The majority of pension are established under trust-based structures and consequently the pension’s assets are legally owned by its trustees – not by the individual member, (your client.) This means the benefits from the pension scheme are paid out at the trustees’ discretion, not directly from the individual’s estate.

Probate avoidance: If a client could include pension benefits in their will, they would be subject to the probate process, which can be lengthy and complicated. By keeping pensions outside the will, the benefits can be paid directly to the beneficiaries – without the well-documented delays associated with probate.

Tax efficiency: Pension benefits paid outside the will can be more tax efficient. An example of this would be that your client’s beneficiaries typically receive the pension benefits free of income tax if they died before the age of 75. If pensions were included in the will, they could be subject to IHT.

At present, this is generally not the case in situations where the distribution of benefits is subject to the discretion of pension trustees. However, as we now know, this will change in April 2027, such that only death in service benefits will remain outside the scope of IHT.

Trustee discretion: Pension schemes are designed to allow trustees discretion over the distribution of death benefits. This discretion ensures that the benefits can be paid to the individuals the trustees believe to be the most appropriate beneficiaries, based on the expression of wish form and other relevant factors.
This discretionary power may also help protect benefits from creditors or legal claims against the estate.

The expression of wish form is vital

An expression of wish form is crucial for ensuring that the benefits of your clients’ pensions are distributed according to their wishes and your estate planning if they die. Without this form, the scheme trustees will decide who receives their pension benefits – and that might not align their wishes and any planning you have undertaken for them.

Dealing with clients through different stages of life, as our SIFA Professional members do and you do as solicitors, we see changes in that life and their plans. This can mean that wishes for their pension benefits can alter as well. It is crucial that we remember to amend any expressions of wishes as circumstances change.
With your busy work schedule, dealing with legal transactions, will you always remember to remind your clients to update their expression of wish form? Obviously, this is particularly important in the event of separation, divorce or dissolution of a civil partnership – or if an intended beneficiary’s death precedes that of the client.

Talk to your financial planning partners

Retirement planning, commonly including pensions, is everyday work for financial planning professionals and these days it will always be inextricably linked to estate planning and ensuring that wealth is passed on to the right people in the most tax-efficient manner.

I am sure they will be delighted to assist and assess at your clients’ existing pension arrangements, to ensure the appropriate expressions of wishes are in place and that this dovetails with your own planning for each client.

This is now more important than ever, as July’s government paper has confirmed that it will be your clients’ personal representatives who will be responsible for tracking down the deceased various pensions to see if any IHT is due.

Referring your clients to your financial planning partner now might well save your clients loved ones/family members having to play pension detective at a time of great personal stress and upset.