Benefits of Writing a Life Policy in Trust

Benefit 1

A trust makes sure that the money paid out from the plan goes to the people the settlor wants to benefit from it. When a trust is set up, the settlor lists all the people they want to share the money from the trust. The settlor can even indicate what proportion of the money they would like each individual to receive – for example John 25%, Jane 25% and Mark 50%.

Benefit 2

The life insurance company can usually pay a death claim more quickly than they could if it were not put in trust. If a life assurance plan is in trust, it is no longer part of the settlor’s estate. So if they die, the trustees claim on the life assurance and the death benefit money is paid directly to the trustees. If a life assurance plan is not in trust, the amount of money a person has as life assurance is added to the rest of their estate if they die during the plan term. This means that the people that are to distribute the estate would need to get a grant of probate before the insurance company could pay out any money. This can take several months.

Benefit 3

The money the plan pays out may be free of inheritance tax. If the plan was put into trust, it isn’t included in the settlor’s estate when the settlor dies, so there is no immediate inheritance tax to pay. However, if the money is kept in the trust until the next 10th anniversary of the trust, some inheritance tax may be payable. To find out more about this, fill in the enquiry form and a qualified financial adviser will help with your unique circumstances.