What to do when your client has died

Individuals instructing Fidelity to sell or transfer the assets must be able to show us they are authorised to do so.

This is usually done by providing a Grant of Representation, a document confirming who has the legal status as executor or administrator to deal with someone's estate after their death.

There are two options available to executors, depending on the value of the estate:

Where a client lived abroad:

Please note that if the client was living in certain current or former Commonwealth countries, it's possible to have the foreign Grant of Representation 're-sealed' by a UK probate registry or sheriff court for use in the UK. For all other countries or dependencies (including Ireland, the Isle of Man and the Channel Islands), a fresh application to the probate registry will be required.

If an executor on the Grant of Probate lives overseas, we will need ID documents sent to us to verify them. Additionally, for any foreign documents we also require an English translated version to be submitted.

This is the point when beneficiaries decide whether they'd like us to invest the money in a new account, transfer the investments into a new name, or sell the investments so they can receive the money. There are forms to complete, potentially tax to pay, and different rules depending on the type of account.

To enable us to complete our identity verification checks, please ensure the executor's date of birth is provided where requested. Failure to provide this will cause processing delays as we will need to confirm this first. Should our electronic checks fail we will request supporting documents.

The table below gives you more information about the options available to beneficiaries when settling the deceased's 
investments:

What we'll do next

• Complete our identity checks
• Carry out the instructions and keep you informed by letter
• Send a confirmation of each sale or transfer, plus a closing statement
• If you've asked us to sell the investments, we'll pay the nominated executor or solicitor so they can pass it on to the beneficiary. We can't pay a beneficiary directly unless they are a named executor.

Additional information about ISA's following a death

ISA accounts become a 'continuing acount of a deceased investor' for up to three years following the date of death. The spouse or civil partner of someone who died on or after 3 December 2014 can inherit that person’s ISA tax benefits. This is on top of their own personal ISA allowance.

• If the investor died between 3 December 2014 and 5 April 2018, the allowance equals the value of the ISA on the date of their death.
• If the investor died on or after 6 April 2018, the allowance equals the value of the ISA on the date of their death or the value on the date the account is closed, whichever is higher.

The time limit for using the increased allowance is three years from the date of death or 180 days after administration of the estate completes, whichever is later. If three years have passed since the investor died, and the ISA has not been closed, we will convert the ISA into an Investment Account.  So if assets remain in the ISA at that point the value will be the higher of the value at date of death or the value at the  date three years and one day after death.

If you would like a copy of our guide to Inherited ISA Allowances please download the below document. This includes all the key information, 
answers to common questions about this process, and some example scenarios.

Guide to Inherited ISA Allowances

Certification is not required if you are uploading the original documents using our portal.

If you are posting the documents, we accept certified death certificates for both single and joint accounts.  Certification must be given by an independent party, the individual cannot be an account holder of the account(s) in question, nor can they be      mentioned on the document being certified.

Certifiers must provide:

• a signature (including the date they signed the certification)
• their name and phone number
• their occupation
• their company name and business address (if applicable) and their company or organisation stamp (if applicable).

We cannot accept a certification of a previously certified copy.

Certifiers can be one of the following:

• Solicitor (must be registered with the Law Society in England, Wales, Scotland or Northern Ireland)
• Legal Executive (must be registered with Chartered Institute of Legal Executives (CILEX))
• Barrister (must be registered on Juriosity)
• Independent Financial Adviser (must be registered with FCA).

• Death Certificates
• Death Certificate Verification form
• Grant of Probate (England & Wales only)

We can also be notified of your client’s death by phone 0800 41 41 16  or in writing:

Fidelity
PO Box 391
Tadworth
KT20 9FU

We cannot usually disinvest or distribute any assets until the court sealed Grant of Probate is received. However, if you are concerned about stock market performance and wish to protect the account from potential falls in value, or where funds are required to pay Inheritance Tax or funeral expenses, we may be able to make an exception. We can release monies from the deceased’s account directly to HM Revenue and Customs (HMRC) or the funeral director on your behalf. To request this, please send us a completed Declaration & Indemnity form.

If the value of the estate does not exceed the Inheritance Tax nil rate band and the value of the investments is less than £50,000, we can accept a Small Estate form but only if submitted with a Will. Please note that if probate has been applied for, we will need to see this.

The following application forms can be signed digitally or with a copy of a wet signature (digital image):

• Selling in the event of a death of a Fidelity investor
• Selling in the event of a death of a Fidelity investor & ISA application form
• Inherited ISA allowance form
• Moving assets to an Investment Account on the death of a Fidelity investor
• Sell your own Investment Account to use your inherited ISA allowance
• Declaration and Indemnity form (Switch to Cash or Paying HMRC or paying Funeral Directors)

We stop any ongoing fees as soon as we are told a client has died. This means you will not receive fees for the month in which we hear of the death. You have the option of setting up a new agreement with your client’s executors or administrators, using our  Fee & Commission Authority (Deceased) form.

In line with FCA guidelines, each person who has legal authority to act for the estate must sign this form. The first payment under this new agreement will cover the whole of the month in which the arrangement is set up.

Please note your client's executors and administrators will not be able to sign for a new agreement on a pension.

Once we have been notified of the client’s death, we send out an information pack to the notifier or informant. The information pack includes:

1. A Document Checklist,
2. A Personal Representatives’ Form, and
3. A Potential Beneficiaries’ Form.

These forms need to be completed and returned as soon as possible.

Please note - HMRC require us to pay out the benefits within two years from the date we were notified of the client’s death. This means that we need to receive all the requested information well in advance of the deadline so we can complete settlement before the 2-year time limit. Documentation should be sent to us as soon as possible to allow us time to review and process it. If we are unable to settle by the tax deadline, tax becomes payable and must be deducted from the settlement.

Document Checklist

In addition to the information pack, we ask for a range of documents to allow us to exercise our discretion on who should benefit. These include:

• Death Certificate
• Marriage or Civil Partnership Certificate (if applicable)
• Decree Absolute/Final Order (if applicable)
• Grant of Representation/ Letters of Administration (if already applied for)
• Will (if applicable)
• Details of any individual trusts set up or held by the deceased which may apply to the benefits held in the SIPP (if applicable)
• Any further information that may be helpful, for example, details of other family members, long term partners or cohabitants

The above documents can be uploaded online under ‘supporting documents’ when you notify us of the client’s passing.

Personal Representatives Form

The personal representative is the person responsible for managing the client’s estate. This will be the executor if they made a Will or the administrator if letters of administration are being applied for.

Once we have the death registered on our systems, the bereavement hub sends out a ''death acknowledgment letter'' to the notifier or informant.

Guaranteed Lifetime Income plan

If the client holds a Guaranteed Lifetime Income plan, we inform Standard Life once the death certificate is received. They stop the monthly income payments into the client’s Pension Drawdown Account and assess if any death benefit is payable.

If the death benefit option applies, a lump sum will be paid into the client’s drawdown account, providing the plan still has a notional value. If there has been an overpayment of income before the death certificate was received, this will be returned to Standard Life.

This may result in assets being sold if there is insufficient cash within the Pension Drawdown Account. The Guaranteed Lifetime Income plan will then be closed. We require the plan to be closed before assets can be distributed to beneficiaries in accordance with the decision made by our specialist Bereavement Committee.

Potential Beneficiaries Form

We have to consider anybody who was financially dependent on the client, such as a spouse, partner, minor or young adult child or other relative. If your client did not make a will or complete an expression of wish, we may also need to consider the rules of intestacy. This is why we need to know about family members such as living parents and siblings. It is very important that any person that could be considered a potential beneficiary is named, and their details provided as far as possible.

Any missing information means we may need to ask for more information which can lead to a delay in payment.

If a potential beneficiary does not want to benefit, it is helpful for us to know this. If they are assumed to be financially dependent, such as the member’s legal spouse or civil partner, we will ask the potential beneficiary to confirm in writing that adequate financial provision has been made for them. We may ask for this written statement to be independently witnessed if the benefit amount is substantial.

How we reach a decision on who benefits

The decision is made at our discretion. We will always take into account any nomination form or expression of wish made by the member, even if it was made some time ago. However, there is no legal obligation to pay any person named on it and we will consider other information in reaching a decision. For example, we may also consider how their estate is divided in their Will or if there is someone who was financially dependent on them.

We know that these decisions can have far-reaching impacts and once made, they can only be set aside by a court or ombudsman. For these reasons, decisions are only made after all the relevant facts and information provided have been considered by a specialist Bereavement Committee with appropriate knowledge and experience of pensions and the specific Plan rules.

Once a decision has been made, we write out to the adviser as well as the nominated beneficiaries, detailing the options available to take the benefit.

Once the beneficiaries have been selected, we will write to each beneficiary and the adviser with an options pack, which details our requirements to distribute the pension to our chosen beneficiaries.

The options available to beneficiaries are:

Anti-Money Laundering

We take fraud prevention very seriously so, before a payment can be made, we need to verify each beneficiaries’ name and address. Please see here for documents the beneficiary(ies) can provide.

Residual Payments and Closed Funds

If your client held assets in a suspended or closed fund, they will be transferred to the beneficiary's new pension account.

• If the beneficiary selects the lump sum payment option, this account will remain open until the suspended or closed fund can be sold into a cash value, and we will then make payment to the beneficiary’s nominated bank account. Whilst we are waiting for the investment to re-open, the beneficiary may receive small residual payments into their nominated bank account.
• If the beneficiary has selected to open their own Fidelity Pension, this closed fund will be transferred along with the other assets.

Residual money can accrue as income from funds, or interest on any cash held in a deceased pension account after an account has been closed. We will attempt to pay these in line with the previous beneficiary instruction. We will only request additional information if we are not able to complete the payment.

Overseas beneficiary

Please note, any beneficiary who is a US resident or holds a US nationality cannot invest with Fidelity. Therefore, they will need to take the lump sum option.

Tax on Pension Death Benefits

When the Pension Freedoms were launched back in 2015 the rules surrounding how pensions are inherited also changed. The below sections detail how death benefits in our pension are taxed in different scenarios.

Income Tax

The rules for money purchase schemes (like our SIPP) are broadly confirmed below:

• If the deceased passed away before age 75, the beneficiary can inherit the pension free of income tax, as long as the beneficiary entitlement begins in line with HMRC rules within 2 years of the pension scheme being notified of the member’s death:
  • For lump sums entitlement begins when we have received the instruction from the beneficiary and a sell of any invested assets has been requested within the relevant two-year period. The instruction must be in good order (nothing else outstanding from the beneficiary).
  • For drawdown and annuity, entitlement begins on the day that the beneficiary can first access their benefits, i.e. once it is in the drawdown or annuity account.
• If the deceased passed away age 75 or over, or the beneficiary becomes entitled to the pension benefits more than 2 years after the pension scheme is notified of the member’s death, the beneficiary will pay income tax at their marginal rate.

Inheritance Tax (IHT)

Typically, when someone dies their financial affairs form part of their estate, which are distributed in accordance with the deceased member’s Will. However, as the decision on who to pay the pension to is discretionary, this normally means benefits will not form part of the estate and will not be chargeable to Inheritance Tax.

You can access information regarding the UK governments intentions to change the way Inheritance Tax is calculated for pension accounts here.

Lump Sum and Death Benefit Allowance (LSDBA)

This allowance limits the value of the lump sum pension savings that can be left for a client’s beneficiaries’ tax free, if they die before the age of 75. The standard LSDBA is £1,073,100. Some people might have a higher allowance if they also had a higher protected lifetime allowance, or tax-free cash protections. If your client has taken any tax-free cash from their pension while they were alive (including a serious ill health lump sum) then their allowance will be reduced by the same amount. If the pension savings they leave are more than their LSDBA, their beneficiaries will have to pay tax on the extra amount, at their marginal rate of income tax.

If your client dies before the age of 75, their pension can generally be paid out as a tax-free lump sum to their beneficiaries subject to the lump sum and death benefit allowance (LSDBA). If their beneficiaries take their pension as drawdown or as an annuity, then the LSDBA doesn't apply and payments will be tax-free if paid within 2 years of notification of death.

After 2 years of notification of death or if your client dies after age 75, their beneficiaries have the same options, but they’ll have to pay income tax on the benefits and the LSDBA won’t apply.