September 16, 2020

The benefits of a life insurance Trust

There are 3 great reasons to have a policy written in Trust and we will be happy to assist you with this process. Our advice and guidance come at no obligation. Meaning you don’t pay us for this service. We get paid by insurance companies, should you decide to start a policy with them. There are no hidden costs.

The main benefits 

  • The proceeds from the life policy do not form part of the Estate and are excluded from any inheritance tax calculation. This means that the overall value of the Estate for the calculation of inheritance tax is reduced. This lowers the potential tax liability and in some cases may result in no tax being payable at all.
  • The benefits are distributed more quickly than they would be if the policy were not written into a Trust because they do not form part of the Estate. This is particularly relevant if no Will is in place, or in the scenario of an inquest being required, as in either of these instances payments can be delayed by months or even years in complex cases.
  • The person who is gifting the benefits of the life policy, known as the Settlor, has the peace of mind of knowing that the benefits from the policy will go directly to the person/people they wish.

What are the current levels of Inheritance tax?

If the total value of the deceased estate is over the inheritance tax barrier (£325,000 in 2020) then any amount above the threshold would be taxed at 40% (2020). Please note: Inheritance tax is exempt for husband, wife and civil partners domiciled in the UK. Source: 2020

Once we have started your policy, we will then email you the appropriate Trust form.

Is a Trust form complicated to complete?

In order to complete the Trust form, you will need to appoint (ideally two), Trustees. They need to be aged over 18 and should be a trusted, relative or long term friend. A Trustee can also be one of the beneficiaries of the Trust. Please note that you can change the Trustees at any time by notifying the insurer and then completing the relevant form.

The Beneficiaries are the people you wish to benefit from the policy. If there is more than one please indicate the percentage share of the policy proceeds each should receive in brackets next to the name. Please ensure that the total percentage amounts to 100%.

The Trust Form needs to be signed by you, the Settlor and also by all nominated Trustees. You will need an independent witness to all of the signatures. You can have one witness for each or one witness for all, the choice is yours. However, the witness must not be a relative, a beneficiary of the policy or someone who is to be a Trustee. They must be completely independent of the Trust.

When you have fully completed and signed the Trust Form and had it witnessed, please scan it and email it to [email protected].

If this is not possible please return it to us at Future Proof Ltd, Priory House, 45-51 High Street, Reigate, Surrey RH2 9AE and we will forward it on to the insurer to be registered. The original document will then be returned to you for safekeeping.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

Trusts are not regulated by the Financial Conduct Authority.

If you have any questions whilst completing the Trust documents please do not hesitate to contact us on 0800 644 4468

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Equally, if the Trustees have any queries regarding their duties in relation to the Trust then please pass them our details and we will be happy to speak to them.

Interested in related features?

Next steps

Whilst you are welcome to get a quote online we would recommend you talk to one of our advisers.

Any quote that your adviser provides you with will take into account your circumstances, your medical history, as well as your budget!

An online quote is just that – a quote – it isn’t a definite offer of cover. What really matters is the premium you are offered, after your application has been assessed.

Call Freephone 0800 644 4468 – Monday to Thursday from 09.00 to 19.00 and on Friday between 09.00 and 17.00.

Please feel free to read our Independent client reviews, or read about the team at Future Proof.

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Take a look at our handy guides ‘What Cover is Right for me?’

Do you suffer from a medical condition and concerned you can’t secure Life Insurance?  Please view our ‘Medical Guides’ for further information.

Whilst we will make every endeavour to help someone to arrange insurance, there is no guarantee of success.  All applications are subject to underwriting.