How to prevent penalties for sole trustee SSASs and FURBS

Estimated reading time: 5 minutes

Trusts and Trustees

Two of the major components of our clients’ retirement and estate planning come in the form of a Small Self- Administered Pension Scheme (SSAS) and a Funded Unapproved Retirement Benefit Scheme (FURBS).  Although the taxation of benefits on retirement and death can differ significantly, they have one thing in common – they are both trusts and require trustees to look after them. 

The HMRC requirement for a professional trustee to be appointed to every SSAS ceased to be the case from 6 April 2006.  As a consequence, some SSASs have only one (non-professional) trustee.  By contrast, a FURBS has never needed a professional trustee.  Each FURBS generally has only one member and whilst we are a trustee to many of our clients’ FURBS, this is not always the case, and so a number of them have only one trustee. 

The purpose of this article is to highlight that those clients who act as sole trustee to their SSAS or FURBS are unknowingly storing up potential problems for their families after their death, which could easily be avoided by some simple planning now.  That planning could involve Barnett Waddingham, but doesn’t have to.

What’s the problem? 

Having a SSAS or FURBS with a lone trustee (usually the member) may seem to work whilst the trustee is alive, but things can become unstuck before or after they die.  For example, general trust law requires two trustees to give a valid receipt for land. So if, as many SSAS and FURBS do, property is one of the assets, a sole trustee could not legally dispose of that property, either by sale or lease.

A SSAS or FURBS always needs a trustee to be responsible for the administration, investment and payment of benefits from the trust.  The absence of a trustee means the day-to-day running of the SSAS or FURBS comes to an immediate halt and, in the case of the SSAS, if that trustee is the Scheme Administrator registered with HMRC, it could mean the loss of the SSAS’s registered status – leading to significant tax charges, including;

reduced benefits being paid to beneficiaries

significant costs and hassle for the deceased member’s family or personal representatives to sort out

delays in making payments

In addition, we are dealing with an increasing number of more senior scheme trustees and have noticed that advancing years can unfortunately bring with it reduced capacity or desire to act as a trustee.

We are not ourselves lawyers, but understand that the delegation of trustee powers under a Trustee Power of Attorney cannot extend beyond 12 months.  Specifically, if a Lasting Power of Attorney is in place, this is likely to cover a period beyond 12 months and so may not be an effective solution.  We would always recommend clients take legal advice if they have concerns on this point.

Can’t someone just be appointed as a new trustee after the member has died?


Clients should review the requirements of their SSAS or FURBS governing Trust Deed.  There will be a section on how new trustees are appointed. The power to appoint will rest with either the existing trustees, or the company which established the scheme (or any successor). 

The problem can be easily solved if the power to appoint new trustees rests with the sponsoring company; provided that company still exists, and is willing to help out.  However, it remains a problem if the power to appoint new trustees rests with the deceased trustee, or the sponsoring company has been sold or wound up. 

How are new trustees appointed if there’s no one to appoint them?

There may be the possibility that the Personal Representatives of the deceased trustee can appoint one or more new trustees to act.  However, this would be an added complication and expense for the individual’s family or Executors, which would come at a time when life is already complicated and emotional. 

The situation may involve the Courts appointing a new trustee, but that could be time-consuming and costly, albeit with the benefit of a legally bullet-proof outcome. 

Can I do something now to avoid those problems for my family?


Additional trustees should be appointed now; meaning there are then others who have knowledge of the SSAS or FURBS and can deal with the administration and distribution of benefits on the member’s death.  New trustees can be either family members, trusted advisers (such as the family’s solicitor), or a company controlled by the family. However, appointing a company as a trustee of a SSAS could cause additional documentary requirements under the Pensions Acts, as it could cause a loss of some exemptions from which most SSASs benefit.    

Appointment is usually achieved by the execution of a simple deed. This is much easier if dealt with now, rather than being passed to the family after the member’s death, who may have little knowledge of the scheme. 

Sounds perfect! Any downsides I need to be aware of?


Many SSAS governing Trust Deeds will require trustees’ investment decisions to be on a unanimous basis and having another trustee involved may complicate matters (the new trustee may block the making of an investment), although it should work fine if the trustees agree on investment decisions, or investment decisions are delegated to the member trustee.

Clients with a FURBS should check the trust’s governing documentation to see what procedure is required for the making of investment decisions.

Could Barnett Waddingham help me with all this?

Of course! 

Your client manager will be able to provide you with more guidance on this subject.  However, we are not solicitors and clients should always take formal legal advice before making changes such as these to their SSAS or FURBS.

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