Death in Service Benefit

Hi,
My wife recently passed away after a long illness. She worked for a US multinational for twenty years and they had a very good Death in Service Benefit. Most schemes pay 2 to 4 times the members salary but my wife's company pay 6 times. Apparently, revenue rules are that the spouse can only take 4 times and the balance has to be set up in an annuity fund. I think this is some type of pension for when I retire.
My question is... My wife put in her Will that this benefit is to be divided with the majority left to me and a percentage will be divided among her family members.
Will this be paid out of the full 6 times amount before I get the 4 times amount with a small amount left for the annuity. Or will their portion be taken from the 4 times amount left to me?
Thanks

Hi Dino

Sorry for your loss.

Are the trustees aware of your wife's wishes? It is the trustees that make the decision of where the money is paid and always make sure the spouse and family are looked after. If she didn't notify the trustees beforehand, they will not know that she wanted others to be given some of the benefit and it will all be paid to you.

If they do know and feel it is a reasonable and fair request, they will pay out as per her wishes. It is taken out of the total pot of money that is paid out by the life company. If the remainder paid to you is 4 times salary or less, it is paid to you as a lump sum. If the remainder is greater than 4 times salary, you get the lump sum plus a small annuity.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

The Revenue rules say that up to 4 x Salary can be paid out as a lump sum to your late wife's estate (and then divided as per her Will). Any balance (2 x Salary) will be used to buy an Annuity (a pension for life) for you. This Annuity will commence immediately (not from when you retire).

Two conflicting views there. I'll get my solicitor to write to the pension company with a copy of the will. I thought Stevens answer seems right but I'll get professional advice.
Thanks.

If your late wife only outlined her wishes in her Will (and not in a Letter of Wishes to the Trustees) then the Trustees can only pay out funds as per the Scheme/Revenue rules. Therefore when assets get into her estate it will be the Executor who must distribute the assets according to the Will.
The Trustees cannot look through to the Will and distribute according to those instructions. That's the role of the Executor.

Dino,

Sorry for your loss. Just to note that maximum lump sum payable is not restricted to 4 times base salary - the Revenue definition of Remuneration for these purposes is broader. See also PM.

Conan's advice is correct, mine was wrong. Apologies for the error.

Reading the revenue rules, the pension payable to the you may be deferred and taken at a later time if you wish.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

Conan said:

If your late wife only outlined her wishes in her Will (and not in a Letter of Wishes to the Trustees) then the Trustees can only pay out funds as per the Scheme/Revenue rules. Therefore when assets get into her estate it will be the Executor who must distribute the assets according to the Will.
The Trustees cannot look through to the Will and distribute according to those instructions. That's the role of the Executor.

Click to expand...

Even if there is a letter of wishes, the Trustees may in some circumstances decide not to follow those wishes. So it is not straightforward. A key question may be whether or not her other family members were dependent on her income. And how dependent the OP was. And also, if anyone else, not in the wishes letter was dependent.

There may also be a spouse's pension payable from the pension scheme.