Failing to Set Up an LPA Could Cost Your Family a Huge Chunk of Your Pension

Failing to Set Up an LPA Could Cost Your Family a Huge Chunk of Your Pension

You’ve worked hard to build your savings, investments, and pension. But did you know that from April 6th, 2027, your pension could be taxed just like the rest of your estate?

This change means that if you pass away with unused pension funds, your loved ones could face a 40% inheritance tax (IHT) bill

That’s why now, more than ever, planning ahead is crucial. And one of the most important steps you can take is putting a Lasting Power of Attorney (LPA) in place.

In 2023, less than 1% of the UK population had a Lasting Power of Attorney in place according to a study carried out by Age Co (Owned by Age UK).

And that’s where Secure Inheritance comes in, to help you prepare so that nothing you have worked hard for goes to unintended third parties.

What the New Rules Mean for You and Your Family

For years, pensions have been one of the most tax-efficient ways to pass on wealth. But with these new rules, your family could end up paying more tax than they expect unless you act now.

In summary:

🔹 From 2027, it is proposed that any unused pension funds and death benefits will be taxed as part of your estate.
🔹 Your family could be hit with both 40% IHT and income tax on withdrawals, dramatically reducing what they inherit.
🔹 But without an LPA, your hands could be tied, especially if you lose mental capacity during your lifetime. Your loved ones won’t be able to access your pension, or manage your finances without going through the expensive and time-consuming Court of Protection process.

Why an LPA is More Important Than Ever

Many people assume their spouse or children can step in if they ever lose the ability to manage their finances. But that’s not how it works.

Without putting in place an LPA for financial decisions:

🚫 Your pension, bank accounts, and even joint assets could be frozen or restricted
🚫 Your family won’t be able to switch your mortgage deal, meaning they could be stuck paying a higher rate
🚫 They may have to go through the Court of Protection, costing thousands and taking months (or even years) just to access your money

An LPA allows you to choose someone you trust to manage your finances if you ever need help. This means that your family won’t be left struggling with legal barriers or unexpected tax bills.