Can you leave a pension to a trust?

Can a pension beneficiary be a trust? For a lump sum, yes, if the scheme agrees. For beneficiary drawdown, no, and the tax and inheritance tax rules differ.

Can a pension beneficiary be a trust?

You can ask the scheme to pay your death benefits to the trustees of a trust, usually by naming them on your expression of wish form. Whether that suits your family depends on the trust's terms and the size of your pot. The choice between naming your children directly and using a trust differs by family, so an FCA-authorised adviser may help you weigh it, and a free ring-back is available using the form on this page.

Two points frame everything else. The trustees can receive a lump sum, which is how a trust is normally paid. A trust cannot take your pension on as income, because the drawdown routes for inherited pensions are open to individuals only. The scheme also keeps the final say, so a trust named on a form is a request, not a guarantee.

Why people point a pension at a trust

The reasons are mostly about control. Someone may want money held back for a grandchild too young to manage it, or for an adult who is vulnerable and could lose a lump sum or a benefit. In a second marriage, a trust can provide for a surviving partner while the rest is kept for children from an earlier relationship.

A discretionary trust (sometimes called a spousal bypass trust when it receives pension death benefits) lets the trustees choose between a named group instead of fixing shares now. For children named directly see children as pension beneficiaries; for nominee versus beneficiary wording see pension nominee vs beneficiary.

What a trust can receive, and what only a person can

HMRC's Pensions Tax Manual says of a lump sum paid from a drawdown fund that "The tax rules do not set any conditions on who can be paid this type of lump sum," and gives the same wording for a lump sum from uncrystallised money. Trustees are not excluded. The manual adds that the scheme's own rules may set limits, so the first check is always the scheme.

Income is different. The manual says "Only an individual can be a nominee" and uses the same words for a successor, while a dependant is defined by reference to people such as a spouse, civil partner or child. Beneficiary drawdown therefore needs a person, as what beneficiary flexi-access drawdown is explains. Someone who wants a partner or child to take income can name that person directly, and a trust alongside takes a lump sum.

A lump sum paid to trustees can then be paid on to the people the trust is for, as the trustees decide under the deed. Who receives what from there is a trust law question. How the pension itself is paid is the scheme's choice; naming a pension beneficiary sets out the basics.

Tax when a pension lump sum goes to a trust

Tax depends on the age you die and on who is paid. The manual says a "non-qualifying person" includes someone receiving the lump sum as a "trustee (other than a bare trustee)", and a taxable lump sum paid to one is treated differently from one paid to a person.

If you die before 75, a lump sum is generally tax-free up to a ceiling: the allowance that applied to the person who died, for lump sums and death benefits. GOV.UK, checked on 17 October 2026, gives it as up to £1,073,100 in certain circumstances, and people with protections may have more. Any amount beyond that allowance is taxable. Before 28 October 2026 payment also had to come within two years of the date the scheme administrator first knew of the death or, if earlier, could reasonably have been expected to know of it, but the manual now says "For payments made on or after 28 October 2026, there is no relevant two-year period."

If you die at 75 or over, the lump sum is taxable. Paid to a person, it is taxed as their income at their own rate. Paid to the trustees of a trust that is not a bare trust, it faces the special lump sum death benefits charge instead: the manual says "The rate of the special lump sum death benefits charge is 45%," and that the payer usually deducts it before paying.

There is a route back. When the trustees later pay part of that lump sum to a beneficiary, the manual says the gross amount is that person's income, but they can set off their share of the charge already paid against their own tax. The effect is tax at the beneficiary's own rates, and any excess can be repaid. The manual adds that "There is no time limit for onward payment of the lump sum death benefit from the trust to the individual."

Inheritance tax on a pension left to a trust

HMRC's technical note explains that deaths from 6 April 2027 bring most unused pension funds and death benefits into the estate for inheritance tax. Finance Act 2026, section 71, applies the new rules to deaths from that date. The note says discretion over who is paid will no longer decide whether the pension is in scope, and that the tax applies "subject to any exemptions or reliefs", so naming a trust does not on its own keep a pension outside the estate.

The trust has a tax regime of its own. GOV.UK says tax is paid on "relevant property", which "includes the assets in most trusts", and charges can arise at a 10-year anniversary, when assets leave the trust and when it ends. How the estate rules and those trust charges fit together for one particular trust, and whether any exemption for a spouse reaches it, is for a solicitor with tax experience to answer from the deed.

The technical note also says the trustee of a trust that is a beneficiary of a death benefit can give a notice for the inheritance tax to be paid through the pension scheme. For the wider rules see pensions and inheritance tax and how to protect a SIPP from inheritance tax.

The scheme decides, so ask it first

Most registered pension schemes work on a discretionary basis. HMRC's note describes trustees determining "who should receive death benefits (and how much) after considering potential beneficiaries and any expression of wishes made by the member". The people running your scheme could pay a trust, or somebody else.

Ask the provider whether it will pay trustees, how it wants them named, and whether its form has room for them. Ask, too, whether the trust needs to be in place before you name it; drafting the deed is a solicitor's work. The practical steps for the form are in filling in an expression of wish form, and if a person you named dies, see what happens when a pension beneficiary dies.

Leaving a pension in trust: the finer points

Do I need a solicitor to leave a pension to a trust?

Setting up the trust is legal work, so a solicitor normally drafts the deed. The pension side is the form and the scheme's rules.

Can a trust get beneficiary drawdown?

No, because the manual says only an individual can be a nominee or successor. Trustees are limited to a lump sum, and anyone the trust benefits receives money only once the trustees decide to pay it on.

Is a pension held in trust counted in my estate?

For a death from 6 April 2027 onwards, unused pension funds mostly count towards the estate for inheritance tax, and the note says trustee discretion no longer decides that. Whether a trust changes the bill is a point for a solicitor.

Is a trust better than naming my children?

That depends on what you want to achieve, since a trust adds a deed, trustees and its own tax charges. Age and vulnerability are the usual reasons.

Should an annuity be in a trust?

That depends on the contract and who it is meant to pay. Ask the annuity provider what it allows, and read pension annuities explained for how they work.

Who to ask about a pension and a trust

The trust itself is a solicitor's job, and the scheme's reply comes from its administrator. The pension side, set against your age, health and other savings, is for an FCA-authorised adviser; use the enquiry form here to ask for a free ring-back. The full picture of what happens to a pension on death is in pension death benefits.