Inheritance Tax & Life Assurance Trusts

Trusts for life policies have many benefits. If you place a policy into a trust, it does not form part of your estate for inheritance tax. In the event of your death whilst the policy is in force, the sum assured will be paid to the trust, provided the insurer has no reason to dispute the claim. It is possible for the beneficiaries to have access to the funds whilst it is still trust property. Trusts offer protection against hostile creditors, which may arise in case of bankruptcy, divorce settlements and care fees. Another benefit of a trust is that the benefits can be paid as soon as the insurer admits the claim rather than wait for Probate.

Trusts are ideal for term assurance policies that only pay the sum assured if you die within the policy term, or whole life policies that are intended for others to benefit when you die. It should be noted that there are HMRC rules against placing existing policies in trust when you have a life-threatening condition and die within a short time.

Policies that generally should not be placed in trust

In general, you cannot benefit from a policy that has been placed in trust. So you will not wish to place an endowment in trust if you wish to cash it in at some point. Similarly, insurance bonds should not be placed in trust unless you wish to give them away to a family member.

Contact us or your financial adviser or us if you require further information about life policy trusts.

Inheritance Planning Company Ltd are not financial advisers and can only offer advice about the trust and not able to give advice on life policies.
Without a Will, you are deemed to die Intestate – this means legislation from nearly 100 years ago decides who benefits from your estate. If you are married with children, your spouse may only inherit the first £250,000 of your personal estate absolutely.

Putting in place a Will ensures that you choose who benefits from your estate. You also can appoint Guardians – people who you choose to bring up your children in the event of your premature death.

Please get in touch with any questions you may have

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Inheritance Planning Company Ltd
18 Walsworth Road

T: 01462 61 66 87

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