Many employers offer senior employees Death in Service as part of their competitive package of benefits. Typically, this entitles the employee to a lump sum payment to the employee’s beneficiaries if the employee passes away whilst still in service with the company. Whilst the benefit is usually commonplace in contracts, many employers do not fully understand their duties and obligations as Trustees or what to do when a claim is made.
What is a Death in Service Benefit?
Death in Service Benefits are a discretional entitlement considered by the Trustees of a company which would be included in the employment contract of senior employees of that company.
This entitlement sets up a trust of a lump sum figure that would be payable to the employee’s beneficiary or beneficiaries should that employee pass away whilst in active service with that company. The lump sum figure is generally equivalent to around 3-7 times the employee’s salary and the specifics if such payment would be detailed within the employment contract. As the Trustee, an employer may wish to seek advice on creating and managing trusts and inheritance tax and trust planning.
The Trustees exercise their own powers and discretion to apply this benefit. The Trustees are usually senior members of the company e.g. board members and/or directors. However, because claims of this nature against the benefit are rare, many Trustees are not aware of their obligations.
How can we help your company and the Trustees get it right?
Review service
- We can review your current process.
- We can review your current documents.
- Prepare an advice note on changes or adaptations to your process.
In-house (non-complex claims) package
- We want you to be able to deal with the simple claims received in-house to prevent legal costs on simple or straight forward matters.
- We can provide you with a bespoke package of advice, direction and precedent documents.
Complex claims advice
- These are matters that do not fit the standard claims criteria, they might have difficult circumstances, family dynamics, or the Trustees can have concerns.
- We can provide a list of information for you to obtain from the family or dependants.
- We can review the paperwork in relation to the individual employee.
- We can prepare an advice report for the Trustees to consider.
- We can communicate the Trustees decision to the family or dependants and obtain bank details and ID.
- We can complete bankruptcy searches against the named dependants.
- We can provide the instructions to for you to give to the insurer to go ahead with the payments.
Deed drafting service
There are times where additional documents are needed for the on-going benefit of the trust and scheme.
These include:
- Trusts for minor or vulnerable beneficiaries
- Deeds to Retire and Appoint Trustees
Registration of Trusts
- Registrations for trusts created with the Trust Registry Service (TRS).
If you feel that your company Trustees may benefit from our assistance with the services above, please do not hesitate to contact us.
