WealthTalk hosts Christian Rodwell and Kevin Whelan unpack the recent changes to executor responsibilities around inheritance tax and pensions—and what they mean for families and estate planning. They highlight the government's shift in responsibility from financial institutions to individuals, raising important concerns for those who may lack financial knowledge. The discussion emphasises the need for greater financial literacy among executors and warns of the risks of defaulting to professional services without fully understanding the costs involved. A must-listen for anyone involved in estate planning or looking to protect their family’s legacy.
In this episode, Christian and Kevin revisit the hot topic of the government’s proposed inheritance tax (IHT) changes affecting pensions from 2027. Following a surge in listener interest, they clarify what’s changed, who’s now responsible, and what practical steps listeners must take to protect their wealth and family.
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Speaker 1 (00:00.098)
The responsibility now no longer falls on the financial services industry, but falls on the personal representatives of the deceased. So let's think about this. I made a will. I'm nominating an executor whose job it is to be the person I trust who is financially savvy, trustworthy, willing to act, who's going to live longer than you in those pensions inside out, and who's willing to accept that responsibility on an unpaid job. Who if they get it wrong, the inland revenue can fine them.
Personally, how many people have nominated an executor based on their financial knowledge?
Speaker 2 (00:38.978)
Welcome to this week's episode of WealthTalk. My name is Christian Rodwell, the membership director for WealthBuilders, joined today by our founder, Mr. Kevin Whelan. Hi, Kevin.
Hi Chris, good to be with you again and a revisit of a subject following a government's crazy, crazy announcement of something that's been hot topic in the recent podcast we did as well.
Absolutely. Yeah, we've seen a real spike in downloads for recent episodes, which was titled, How to Protect Your Pension from Inheritance Tax Changes Coming in 2027. And that was episode 292. So about a month ago, I'll link to that one. You should definitely go back and listen to that if you haven't already done so. But Kevin, can you just give us the highlights from that one?
Well, you know, if we go back, it's this principle that the government's got a massive black hole. They're trying to plug it in any way possible. They made a decision in the autumn budget last year that one of the easy raids would be taxing people's pensions on death. And up until now, pensions have never been taxed on death. They've always been inheritance tax free. Now, anybody who listens to that will hear how annoyed I got and how I got my high horse about it. And that's fine.
But part of the proposal, which was being mooted by the financial services industry, which was a challenge, was the responsibility for the collection of the data, the collection of the money, the payment of the tax, and then the distribution to the beneficiaries, which is quite a lot of work, if you say it out loud, was falling on the financial services companies to do that work. And I made the argument.
Speaker 1 (02:22.152)
in the podcast that that was an outrageous thought. you should, if you haven't thought about it, is consolidate as far as makes sense your pensions to simplify them to make this job easier. simple is better than complex. B, you got more visibility of your pension so you actually see what you've gotten.
maybe even help you understand where your future retirement is headed, but see, make it lot easier to be able to deal with the calculation of the value of your pension on your death. Because you do not want to bereaved relatives in a position where you've got to the tax within six months, right? That's the law. Inheritance tax has got to be paid within six months and leaving
Pensions out in the ether and we know how much money is floating around unclaimed pensions and somebody can have the job to try and collect all that information. Anyway, the financial services industry went up in arms as you'd expect. Why would they want to A, do the job, B, charge a fee for it? That would be objected to. And lo and behold, the government relented. Sadly,
not on the tax, but they're now saying, which is even worse in my view. So listen to this carefully, right? Read between the lines and see what this might mean. Maybe you might want to ask me to clarify it, Chris. The responsibility now legally announced just over a week or so ago in July, no longer falls on the financial services industry, but falls on the personal representatives of the deceased.
What does that mean? It means anybody named as an executor in your will. bloody hell. Yeah. How was that going to work? How on earth? Not least people don't have wills. We know that because we try and encourage people to do them. But even if they do, how many people have nominated an executor based on their financial knowledge, but more based on the friendliness and the relationship?
Speaker 1 (04:44.696)
that they have and how many people would know if somebody died where to find the pensions, how to assess the pensions, how even to assess which pensions are subject to inheritance tax and which ones aren't because some are and some aren't and I'll talk about that if you want. And where is all this updated knowledge going to come from to transfer from the person who's got the pension to the people who are going to have to manage it?
and pay the tax. And by the way, if you're a personal representative or an executive of somebody's estate and you get any of this wrong, you're legally on the line legally on the line to pay the tax. Okay. So let's think about this. Now scratch your head and think I've made a will. I'm nominating an executor whose job it is to be the person I trust who is
Financially savvy, one, trustworthy, two, willing to act. If they hear about this, they probably wouldn't want to act and probably will live longer than me because you wouldn't nominate your parents as an executive because they're probably going to die before you. So you need a financially savvy person that you know, like, and trust who's going to live longer than you in those pensions inside out and who's willing to accept that responsibility on an unpaid job. Who if they get it wrong,
the Inland Revenue can find them personally. Right? Figure that one out, please. Why is that good news? It is not good news. It's only good news for the financial services industry because they're off the hook.
It's a big one and there is a lot online. However, you know, there probably hasn't been enough exposure to this and the impact that this will have, which is why we wanted to bring this to everyone's attention today. And we will definitely be doing our best, won't we, to help our members and our listeners.
Speaker 2 (06:42.696)
And I'll just mention quickly that we are in the process of finishing off a guide, which is all about the impact of the inheritance tax changes on pensions. So if you're interested in this topic, and if you've got a family and if you've got a pension, then you should be interested. You need to be. Head to wealthbuilders.co.uk forward slash IHT. And as soon as that guide is ready in the next few weeks, we will send you a copy. Anyway, let's continue, Kevin, with this current update.
Well, we're going to have to do another guide, Chris. We're going to have to write a guide for executives, A, for the people who make wills, because you've got to choose people wisely. So what does an executive need to do? What is the legal responsibility? What is the role they have to follow? What report do they have to send to the HMRC and so on? And we'll write that guide and we'll write a guide for the will writer, the person whose will it is.
We'll write the guide for the executor as the receiver of the instruction to say, if you've been nominated as an executor, do not listen to the podcast, this one about the legal responsibility. Now we won't do that. We'll say, look, this is a responsible position now, which it always has been, but it's you legally on the line on this one. So you want to be clear.
on what it is that you're going to be required to do. And it's unlikely that everybody, anybody who's nominated an executive will be financially savvy on pensions and other assets. And the more complex a situation somebody's assets are, the more financially savvy either you need to be or the people that you work with are. So two points I want to make. One is financial savviness isn't in built in us all.
We can learn it though. So, executors can do a better job of learning how to take that responsibility seriously, but also how to learn some of those lessons for their own asset. I think what we will do is try and be the guide to executors to help them to be up to date with information, because this has just changed within a few weeks. How's anybody going to keep up to date with what's going to change over somebody's lifetime?
Speaker 1 (09:02.22)
So we will take a responsible position as an executor guide to help them discharge their liability properly, but without accepting the responsibility of being the executor. We don't want to be somebody's executor because we're not in that position of knowing the family inside and out. Maybe, you know, with families we work with, we could be, but
Generally speaking, we're not going to want to do that. But the danger, and here's the danger I think people could knee-jerk into, that because they don't know anybody financially savvy, they somehow might be defaulting. And I see an opportunity that many institutions, particularly professional banks and other institutions, will want to be nominated as the executor.
By nominating themselves in the will as the executor, as in ABC Limited, as the formal executor, and if somebody dies, you could have terms and conditions that say, we're going to charge you X percent of the estate, and the beneficiaries have got nothing to say about it. They can't stop it because the will is appointed them formally. I don't want anybody to do that. Please don't do that. And if you've made a will, check who your executors are.
And please, please don't make it a default professional because you can't know what the charges are going to be. And at a time of death, who's going to argue. was talking to somebody really genuinely quite recently and we had this conversation and he said to me, Kevin, my family member almost walked into this problem by accident. Here's what happened. Obviously names to protect the innocent, right?
But if family members, so a brother and sister, parents had died, let's say the estate was worth, I think it was three million. So a substantial estate. The default nomination or the nomination that the person thought, I can't deal with that. They appointed a bank. That was who was nominated. And the terms and conditions, which were kind of just accepted really by the person receiving the estate, unknowing to them.
Speaker 1 (11:23.896)
was 3 % of the estate. And would you like to know how many assets there were in that estate? Three. A stock market portfolio, a substantial private residence, and I think a commercial property. By three things, 90 grand to collect data on three things. Outrageous, absolutely outrageous. Now, fortunately, the other sibling read the terms and conditions, objected to it, and in the end, you can get, hopefully, they don't have to legally,
You can get them step down and if they step down, then you can appoint somebody else and a job like that. Three assets would probably be three or 4,000, not 90. So as well as an inheritance tax bill, you've got a bill to pay because you don't know what you're doing. So I'm going to encourage everybody who listens to the podcast to make a will think carefully about the people you going to nominate. Maybe Chris, we can create another wait list. Could we?
You know, wealthbuilders.co.uk forward slash executor, E-X-E-C-U-T-O-R, executor. And then we can say, we'll create a guide for you as the person nominating and a guide for the person receiving the nomination and be in the background at no fee, no cost, no insistence that we act. with just the suggestion would be in the world to say, I point these people.
as my trusted executors with the power to appoint someone else to get help if they need to. And that power is flexible. So it could be with anybody that the executor subsequently decides would provide them with a good level of service at a fair fee. Because you don't want the responsibility of collecting pension information if you don't know pensions. As I said, some pensions are inheritance taxable and some are not. How are you going to know that? You can't know that. So all you're going to do is end up in a position.
where you don't know what you're doing. And if you don't know when you get it wrong and you underpay the tax and the revenue you find out, actually you didn't declare that and that was a pension that was taxable. The tax bill will have to be paid by the executive. Okay. And we don't want that to be. So there you go. You know, it's a tiny, tiny change in legislation or proposed legislation. Obviously it's not a law yet, but this is what's being proposed.
Speaker 1 (13:48.792)
But it's not far now, you know, it's only April 27. And that's plenty of time for anybody to put their affairs in order on their pension. Get awareness of your pensions, find out where your pensions are. Your state pension, by the way, is not subject to inheritance tax. Final salary pensions like NHS pensions and others are not subject to inheritance tax. They're not of value. What's subject to inheritance tax, Chris, are those that have a value. Like you've got a pot.
And that you can tell that because when you go online or you read a statement, the money has a value, the value is X thousand. Then that's going to be included. One of the point worthy of notes, I'm not scaremongering here at all. I never do that. There is no inheritor's tax to pay between spouses. So it's the money that's left over on the death of the second person, but that can easily happen. know, so we'll just need to be mindful.
that inherits as tax is never a tax to pay between spouses on any tax at all. It's only after the spouse has gone. And I covered all the tax allowances and so on in the previous podcast. not going to repeat those now.
A reminder again that we'll link to that last episode in today's show notes. If you haven't listened to that, highly recommend that you click on that right now and go back and check it out. That was good information, Kevin. Thank you. Do also sign up for the guide. That will be on its way to you very shortly, wealthbuilders.co.uk forward slash IHT. And if this is concerning you, then feel free to reach out to us. We'd be more than happy to pick up the phone and speak with you and you can do that.
that are very easily contacting hello at wealthbuilders.co.uk or head to our website, which will have a big red button, which you can click to book a call with us. yeah, we're happy to have a chat anytime, Kevin, with anyone that's got concerns about how this might affect them.
Speaker 1 (15:48.718)
Well, and I think it's a lot broader than anybody thinks about because you don't know when, how your estate's growing. We know all the allowances have been frozen to 2030. So just the accidental valuation of pension increases, the accidental increase in property values is going to shunt more people into the inheritance tax net than ever before. I think you summarized it quite nicely, Chris, actually. And normally it's me with the creativity, but I think you got one and maybe you didn't realize it.
If you've got a pension and you've got a family, you need to know this. So think about it. If you're listening and you've got a pension, that's in a pot and you've got a family, you need to explore this more and get the clarity because awareness is the precursor to all good action. When you're aware of something, you can make a decision and you can always make one of three decisions, Chris. Number one, I'm aware. Thank you.
I'm not going to do anything about it. Great. But awareness is everything. Number two, I think there's some things I can do myself. So I'm just going to do those things or that thing. Number three, I need a bit of help. Find somebody you trust, whoever that person or company is to get that level of support. But it starts with awareness. What I'm worried about here more than anything else is the lack of awareness.
People don't know where their pensions are. They don't know how they're going to be taxed. They don't know what inherits as taxes. They don't know what, who their executives are even, because they could have made a will 10 years ago and the executives have split up or the executives have passed on or the executives are no longer in, in touch. So it's time to review, to get clear and to make a good decision about what you're going to do here. Wherever you get that from.
please take a moment and get that clarity. And if we can help you, we'd love to do that through the guides, through things to help you do yourself. We're not angling for work. fact, we couldn't do all the work for all the people who reach out to us. It's not been possible, but we can work with some people where that complexity means they need that help and we can offer it and we can do so in a very transparent way.
Speaker 2 (18:06.062)
So do you think would also benefit from hearing this message? Hit the share button now, send this episode to a friend and hit the like or give us a star rating whilst you're there. We would really appreciate that. So we can spread this message far and wide.
Yeah, at least send it to the executor if you will.
All right, thanks, Kevin. That was really good. thanks for listening today, Kevin, you and I will be back same time, same place next week.
We're approaching number 300 soon, we?
Well, we are we're already prepping that one in the background. Yes, just four episodes away now.
Speaker 1 (18:35.534)
I wonder what we're going to do to reach that. Cause 300 is a bloody big commitment, you know, on behalf of us. And here's a quick call out on 300. I'm going to be asking if you've ever listened to an episode, if you've ever liked anything we said, that's going to be a big call out for me to say, give me 30 seconds. I've given you 300 episodes together with Chris, give me 30 seconds of your time and just hit a review.
or like it so that we know that 300 episodes later, we're doing good work. Otherwise, Chris, up to 300, we don't get any I'm going to stop. It's too hard work, right? We're not like we're trying to find things to promote. We're not promoting. This is valuable information that people should act on whether they resonate with WealthBuilders or whether they don't.
Right. So thanks once again for listening today and for all of you who perhaps have listened to all 296 episodes. We know there are some of you out there. Anyway, we'll be back next week. See you.
you've finished my line. I'll let you have it.
Speaker 1 (19:48.344)
We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside the WealthBuilders membership site to help you create, build and protect your wealth. Head over to wealthbuilders.co.uk slash membership right now for free access. That's wealthbuilders.co.uk slash membership.