Death benefits – The case study of Mrs T
Mrs T’s late husband took out a personal pension plan (the Plan) with Zurich in October 2002 and nominated Mrs T to receive the benefits payable upon his death. Mr T’s health began to suffer in December 2012. In November 2013, Mrs Y, a relative of Mr T, wrote to Zurich on his behalf to notify it that Mr T had decided to change his nominated beneficiary to her. She also instructed Zurich to correspond only with her going forward. Mr T died in September 2015.
Zurich requested a copy of Mr T’s final Will from Mrs Y, in order to establish if its contents substantiated the change of nomination he had made in November 2013. Mrs Y provided Zurich with a certified copy of Mr T’s final Will, which was dated 7 July 2010. Whilst the Will made no reference to who should stand to receive death benefits derived from the Plan, Zurich noted that the Will said “I declare that I have made no provision for my wife, having regard to the substantial provisions I have already made for her in my lifetime and to the fact that she has substantial resources of her own.” Zurich did not make any enquiries of Mrs T and paid the Plan death benefits to Mrs Y.
After the death benefits had been distributed, Mrs T wrote to Zurich and said that she should have received the death benefits derived from the Plan. She enclosed a copy of a Court of Protection Order (the Order) dated 25 January 2013, which appointed an interim deputy for Mr T. Mrs T claimed that the Order demonstrated that Mr T did not have mental capacity to nominate another beneficiary in her place in November 2013 and so the change of nomination to Mrs Y should be disregarded. She said she had been alienated from Mr T by his family prior to his death. Zurich said that, in deciding who should receive the death benefits, it had taken account of the nomination form submitted in November 2013 and the late Mr T’s Will. Zurich acknowledged that Mrs T considered any documents submitted after the Order was implemented should be disregarded, but said that it was unaware of the Order when it paid out the death benefits.
The Deputy Ombudsman noted that the Trust Deed and Rules governing the Plan provide that the Plan death benefits were payable to any of the eligible beneficiaries at Zurich’s absolute discretion. As a spouse, Mrs T was within the class of potentially eligible beneficiaries, regardless of whether or not she was the subject of a valid nomination.
It was noted that Zurich did not make any enquiries of Mrs T, even though she was a spouse and the nominated beneficiary before the change of nomination in November 2013. The Deputy Ombudsman concluded that, taking into account Mrs Y had written to Zurich to instruct it to change the nomination to herself, evidence should have been sought from Mrs T before paying the Plan death benefits in full to Mrs Y.
The Deputy Ombudsman directed that Zurich should reconsider Mrs T’s application to receive the Plan death benefits.
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