Death in service benefits: decision-making support

Death in service payments

Many employers provide a lump sum death in service benefit. The benefit may be integral to a workplace pension scheme or provided under a stand-alone life insurance scheme. Typically, the arrangements are established under a trust and the trustees have a wide discretionary power to decide who will receive the benefit. The trustees have a legal duty to make any payment in compliance with the terms of the trust and relevant laws.

Why instruct lawyers?

It is essential in all cases to follow an appropriate process, to maintain adequate records and to communicate with the interested parties. Many death in service cases are straightforward for the scheme trustees and they are able to choose the beneficiary of the lump sum with relative ease. Some cases can be far more difficult and require detailed due diligence enquiries and a meticulous decision making process. The consequences of getting it wrong can be serious.

How can we help?

At Weightmans, we have extensive experience of providing advice and support with death in service cases. We can help trustees to ensure that an appropriate decision is made. The advantages include not only reducing risk but also freeing up resources within your organisation that would otherwise be required to deal with each case. Also, our team is experienced at dealing sensitively with bereaved family members.

Our death in service capability

We can help as much or as little as you like but the service in greatest demand is our full-service outsourcing option. It includes:

• Obtaining instructions, documents and other information from you.
• Making enquiries (including with family members) to identify potential beneficiaries and to gather further relevant documents and information.
• Preparing a report to the trustees. Normally this will: summarise the facts of the case; refer to the relevant provisions in the scheme trust deed and rules; identify potential beneficiaries; and make a recommendation as to the recipient(s) of the benefit (and their shares).
• Supporting the trustees in making the payment decision, including attending the trustees’ payment decision meeting, if required.
• Preparing a minute of the payment decision meeting.
• Verifying the identity of the beneficiary and carrying out a bankruptcy search, if required.
• Preparing letters to be issued to the interested parties to inform them of the decision.

We provide legal support on all other aspects of group life insurance too, including scheme establishment, amendment and termination. We review (and often amend) the standard documents supplied by insurance companies. We set up the trusts into which benefits for children and vulnerable adults should be paid. We can act as the trustee of those trusts and administer them.

To discuss your requirements, please contact Mark Poulston on 0151 242 9473 or at mark.poulston@weightmans.com