At present, when someone with a life insurance policy dies it can take months for any payment to be made to their family due to a lengthy legal process.

Putting a policy in trust can be a better solution. It is one way of helping make sure that the value of a life assurance policy is given to the person that the life assured wants it to go to, without unnecessary delays. A trust avoids the need to obtain probate before making a claim, thereby speeding up the process.

Policies written in trust are technically no longer your assets and belong to the beneficiary from the moment the trust form is completed. Thus the benefit is outside of your estate and will ensure the life insurance will not be taxed at the 40% inheritance tax rate on death. The monies are paid quickly and avoid any probate delays with the HMRC, which can average six months.


Pitfalls to be aware of

If your Life Insurance policy is worth more than £350,000, special care needs to be taken when using a trust, therefore please contact us to ensure this policy will not be subject to tax.

Care should also be taken if a couple have two policies in trust for each other as this could make them ineffective, again, please contact us for advice as this is a complex area.

Not sharing the same domicile for inheritance tax purposes as one person will loose the married couples tax free allowance. Please refer to the 'Are you or your partner a Foreign National?' section.

The FCA does not regulate Trusts and some forms of Inheritance Tax Planning.