An expression of wish is a document that allows you to say who you would like to receive the benefits from your pension or life insurance policy when you die.
It's not legally binding, but it strongly guides pension trustees or insurance providers when they make decisions about distributing your assets.
While making a will is often the first step in estate planning, an expression of wish plays an important role when it comes to pensions and life insurance. These benefits don't automatically fall under your will; instead, they are often managed separately by pension trustees or insurance companies. Without an expression of wish, these entities may have to decide who receives the benefits based on their own criteria, which might not align with your intentions.
As such, an expression of wish complements other estate planning tools like wills and trusts, ensuring that no party of your estate is left to chance.
Whether you're just starting to think about your estate planning or revisiting it after a life change, this guide will walk you through the importance of an expression of wish, how to complete one, and the potential consequences of not having it in place.
Table of Contents
- What is an expression of wish?
- What is the difference between an expression of wish and a will?
- Why is an expression of wish important?
- How to write an expression of wish
- Who needs a copy of your expression of wish?
- When and how should you update an expression of wish?
- How pension providers and trustees use an expression of eish
- What happens if you don't have an expression of wish?
- Who should I name in my expression of wish?
- Is an expression of wish better than a nomination?
- What happens if my expression of wish conflicts with my will?
- Conclusion
What is an expression of wish?
An expression of wish is a non-binding statement where you indicate who you want to receive the benefits from your pension plan or life insurance policy when you die.
For example, if you have a pension plan, you can fill out an expression of wish form provided by your pension provider. On this form, you would name the person or people (beneficiaries) you want to receive your pension benefits if you die.
Similarly, for a life insurance policy, you would indicate who should receive the payout.
What is the difference between an expression of wish and a will?
A will typically covers all of your assets, including property and money. However, an expression of wish is more limited in scope, focusing specifically on your pension benefits and life insurance policies.
A will is also legally binding, meaning that the executors of your estate are required to follow the instructions laid out in it. An expression of wish, on the other hand, is not legally binding, but it strongly influences the decisions of trustees or insurance companies.
Unlike a will, an expression of will doesn't require a witness or other formalities either, making it easier to update as your circumstances change.
Why is an expression of wish important?
Pension benefits and life insurance payouts often represent significant financial assets that are separate from the rest of your estate. Without an expression of wish, the distribution of these assets could be left to the discretion of trustees or administrators, who might not have insight into your wishes or family dynamics.
Having a clear and up-to-date expression of wish ensures that the people you want to benefit from your pension or life insurance are explicitly named, reducing the chances of disputes or confusion.
How to write an expression of wish
Most pension providers and life insurance companies have their own forms for an expression of wish. Always use the official form provided to avoid any complications.
When writing an expression of wish, it's essential to include certain key details to make sure your intentions are clear:
Clearly state the full names of the people you want to receive your benefits;
Indicate your relationship to each beneficiary, such as spouse or child;
If you are naming more than one beneficiary, specify what percentage of the benefits each person should receive;
Consider including contingent beneficiaries, who would receive the benefits if your primary beneficiaries are deceased at the time of your death.
While not required, you can include a brief explanation or any special instructions regarding how or why you've made these choices. This can help trustees understand your thinking and follow your wishes.
Who needs a copy of your expression of wish?
The primary recipient of your expression of wish should be the institution managing your pension or life insurance policy.
Each provider typically has its own process for submitting an expression of wish. This often involves filling out a specific form provided by the company and returning it by post or online. Make sure you follow the instructions provided by your provider to make sure your expression of wish is properly recorded.
If your estate plan involves trustees or executors, they should also have a copy of your expression of wish.
It can be helpful to tell your chosen beneficiaries about your expression of wish, too. While they don't necessarily need a copy, knowing that such a document exists can help them make sure your wishes are respected.
When and how should you update an expression of wish?
Life circumstances change, and so should your expression of wish. It's important to review and update this document regularly, particularly after major life events like:
Marriage or divorce
Birth of a child
Death of a beneficiary
Change in financial situation.
To update your expression of wish form, contact your provider and request a new one or update your details through their online portal.
Once you've completed the updated expression of wish, follow the same submission process as before and make sure to confirm with the provider that your new instructions have been recorded.
How pension providers and trustees use an expression of eish
While an expression of wish is not legally binding, it serves as a strong recommendation to trustees on how you would like your pension benefits to be distributed.
Trustees will review the names you've listed as beneficiaries, along with any percentages you've allocated. They consider your instructions alongside other factors, such as the needs of your dependants and any relevant laws. They will also take into account the context in which the expression of wish was made. For example, if the expression of wish was made many years ago and your circumstances have changed significantly, trustees might consider whether it still reflects your current intentions.
Regardless, trustees are legally obligated to act in the best interests of all beneficiaries and to exercise their powers with reasonable care and skill. While they aren't legally bound to follow your expression of wish, they must exercise their discretion fairly and justly, considering your wishes alongside other relevant factors such as the financial needs of dependents and any other known intentions you have regarding your estate.
Examples of how trustees have handled expressions of wish
Overriding an outdated expression of wish
A pension member had submitted an expression of wish 20 years prior, naming his then-wife as the sole beneficiary. However, the couple later divorced, and the member did not update the document. After his death, the trustees carefully considered the expression of wish but decided to distribute the benefits between his children from a second marriage who were financially dependent on him.
Honouring a clear and current expression of wish
In another case, a member submitted an expression of wish shortly before passing away, clearly stating that his pension benefits should be split equally between his children. The trustees followed this instruction to the letter, as it was clear, up-to-date, and reflected the member's current family situation.
What happens if you don't have an expression of wish?
Without an expression of wish, the trustees of your pension plan or the administrators of your life insurance policy will decide how to distribute your benefits. While they are required to act in the best interests of all potential beneficiaries, without your guidance, they may not distribute benefits as you would have wanted. For example, if you were previously married, the trustees might still distribute benefits to your ex-spouse.
Pension schemes often have default rules that apply in the absence of an expression of wishes, but they still may not reflect your personal wishes.
The decision-making process may also take longer without an expression of wish, as trustees will need to investigate your personal circumstances, identify potential beneficiaries, and decide how to distribute the benefits. This delay can be problematic, especially if beneficiaries are depending on them.
Finally, if pension benefits are paid into your estate instead of directly to beneficiaries, they may be subject to inheritance tax, which could reduce the amount of money your beneficiaries ultimately receive.
Who should I name in my expression of wish?
Who you name in your expression of wish is up to you. Common beneficiaries include:
Spouse of partner
Children
Parents or siblings
Extended family
Close friends
Charities.
It's often a good idea to consult a legal professional when deciding who to name in your expression of wish or will. They can provide advice tailored to your specific circumstances.
Is an expression of wish better than a nomination?
Neither an expression of wish nor a nomination is inherently 'better' than the other; it all comes down to your specific circumstances and what you want to achieve with your estate planning.
If your personal circumstances are likely to change, or if you want trustees to have the flexibility to adapt to changing situations, an expression if wish might be the better option. Particularly in complex family situations, such as blended families or where you expect beneficiaries' financial needs to change over time.
On the other hand, if you have a clear and unchanging view of who should receive your benefits, a nomination may be better.
What happens if my expression of wish conflicts with my will?
Pension benefits and life insurance payouts fall outside of your estate, meaning they are not governed by your will. Instead, trustees or providers use the expression of wish as guidance when deciding how to distribute these benefits.
Generally, if there is a conflict between your expression of wish and your will, the expression of wish will take precedence for the assets it covers.
Conclusion
Having an expression of wish is important to make sure your pension benefits and life insurance payouts are distributed according to your wishes.
If you're unsure about any aspect of your expression of wish or how it fits into your broader estate plan, seek advice from a solicitor or financial advisor.
At Lawhive, we understand that estate planning can be complex, but it doesn't have to be overwhelming.
Our network of expert wills, trust, and probate lawyers is here to help you. Contact us today for further information and support.