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Spousal Bypass Trust

A Spousal Bypass Trust (SBT) can be used with Personal Pension Plans to protect pension death benefits from Inheritence Tax.

Generally, payments on death from pension schemes do not normally form part of the member's estate, as the trustees of the scheme have discretion over who will receive the pension death benefits.

Any payment of lump sum death benefits to a surviving spouse or other dependant is usually exempt from IHT, but the value of these death benefits may create an IHT liability when the surviving spouse dies. An SBT can help to protect these benefits from IHT liability.

Key benefits:

The Trust helps to reduce IHT liability.
The Trustees can make payments to the beneficiaries as required - for example, the surviving spouse can receive funds from the Trust.
The pension planholder can provide instructions to the Trustees, for example they may restrict full payment until the children are 18.
A template Trust Deed is available to help you write a Trust.

The impact of any taxation (and any tax reliefs) depends on individual circumstances.

How to put a Spousal Bypass Trust in place