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QROPS and IHT Planning for the Children

“QROPS and IHT planning for children and future generations. Protect your QROPS even after your spouse’s death from IHT with a Succession Trust.”

Succession Trust Planning to Avoid IHT on a QROPS for the Children

We already know that a QROPS avoids up to 45% tax upon death after 75 and also avoids UK income taxes of up to 45%. Furthemore, 100% of the pension pot gets passed as a cash lump sum to the spouse or named beneficiaries upon death within a QROPS.

But, what happens to the spouse? What happens when she dies? Is there a way to avoid 40% inheritance tax (IHT) on any monies she has left?

The Succession Trust Planning for QROPS

Fortunately, Sovereign Trustees have come up with a plan to protect future generations from inheritance tax through the formation of a succession trust.

The succession trust has been designed to receive lump sum death benefits from a QROPS (Qualifying Recognised Overseas Pension Scheme) and to provide enhanced planning opportunities for surviving beneficiaries.

It is well known that a QROPS provides very tax efficient lump sum death benefits, including an exemption from UK Inheritance Tax (IHT). However, it is also important to consider the future tax position of the recipient of those death benefits: usually the spouse or partner.

Where a surviving spouse dies having previously received a QROPS lump sum death benefit, any unspent monies will usually form part of that spouse’s estate.

As an alternative, the Succession Trust enables the pension scheme trustees to transfer assets seamlessly into trust when the QROPS member dies. The Succession Trust can then provide for the surviving spouse. On the death of the surviving spouse the Succession Trust will continue to provide for other beneficiaries such as children, but will avoid the delays of probate and cost of IHT on the spouse’s death.

Any existing or prospective QROPS or QNUPS (Qualifying Non-UK PensionScheme) member is entitled to establish a Succession Trust, which effectively remains dormant until the death of the QROPS member. The Succession Trust is competitively priced with the Malta version costing only €400 to establish and €250 each year whilst dormant.

Once the Succession Trust has received the QROPS death benefits and is active, the annual charge will be approximately €1,500.

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QROPS and IHT Planning for the Children by

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