Why place a policy in Trust?

By placing a life insurance policy in Trust, the proceeds of the policy after the death of the policy owner can be paid to the beneficiaries. The proceeds do not form part of the estate for Inheritance Tax purposes.

Our customer guide to our Flexible Trust is a good place to start.

What is a Trust?

A Trust allows the owner of a life policy (the settlor) to specify who can benefit from the policy proceeds after they die (the beneficiaries). This is in a binding legal document (the Trust deed) where two or more individuals (the trustees) hold the life policy and are bound to follow the wishes of the policy owner after he or she dies.

Quicker payment on death

When someone dies there is a legal process of probate where all the assets are gathered in and then paid out to beneficiaries. This can take several months and sometimes even cash in a bank account cannot be paid out until the probate process is completed. The Trust is completely separate from your assets, it is not included in your Will and does not need probate. This means the cash from the life policy can be paid to beneficiaries much more quickly.

Flexible choice of beneficiaries

You can include anyone in the list of beneficiaries. If circumstances change you can easily add beneficiaries. Also, on your death the trustees have flexibility in how they benefit, for example, young children or grandchildren. The cash in the Trust is not included in your assets on death and so is not liable for Inheritance Tax on death.

Setting up a Trust

This requires the completion of a Trust Deed. You will need to take care in selecting the correct Deed to match your requirements. If in doubt, please consult your financial adviser.

Putting existing policies in Trust​

Below are useful resources including a Guide and the forms that you may need when placing an exisiting policy in Trust.