QROPS assets are exempt from IHT on a scheme member’s death. However, when death benefits are paid to a member’s spouse, they can create additional IHT liability on the eventual death of the spouse, if their assets exceed the combined IHT threshold.
By using a spousal bypass trust, a member can ensure that QROPS death benefits are paid out to the trust and kept outside the spouse’s estate.
The same trust can be used for a retirement lump sum benefit. “For any Trinity clients who are concerned about their future IHT situation, the use of the spousal bypass trust can enable them to pay not just their death benefits, but also some or all of their retirement lump sum benefit into the bypass trust, so keeping it outside of the IHT net as well,” said Boal sales director Paul Forman.
Boal launched Trinity, a QROPS approved under the Isle of Man’s 50c legislation, last November. According to the firm, it is a trustee or administrator to more than £400m of offshore pension scheme assets.
