Your insurance policy is an important asset, and by putting life insurance in trust you can control the way your dependents receive their inheritance. Here, we take you through the advantages of life insurance trusts, how it works, and the other considerations.

What is a Trust?

Trusts are legal arrangements that let you leave assets for your loved ones. A trust is managed by one or more trustees i.e., family members, spouse, or a legal professional – until the trust pays out to your dependents, which can be upon your death, or on a certain date such as when a child turns 18. Your life insurance policy can be put into a trust, which is usually referred to as ‘writing life insurance in trust’. The main benefit of this approach is that the value of your cover is generally not considered part of your estate.

Benefits of writing life insurance in trust:

Below are some of the ways you can benefit from a life insurance trust.

  • Control over your assets – if you don’t have a trust, your money might be used to pay off outstanding debts. Putting life insurance in trust gives you greater choice, as you can decide who to appoint as your beneficiaries and trustees. Setting up a trust is crucially important if you’re not married or in a civil partnership, as otherwise, your assets may not transfer to the intended recipient.
  • Quick access to your money – without a trust, when you die your beneficiaries would need to obtain probate, which can cause delays. With a trust in place, your dependents could receive the benefits within a couple of weeks of the death certificate being issued.
  • Protect your beneficiaries from Inheritance Tax – writing life insurance in trust means the money paid out from your policy is not considered part of your estate.

Remember; your trust can last up to 125 years – there is no expiry date for trusts set-up for charitable purposes – but ultimately, your trust agreement should last however long you consider necessary. Your circumstances may influence the length of time you specify. Also note there is no extra cost in writing life insurance in trust you can put your life insurance policy in trust when you opt for it, or even after that – you simply need to own the policy.

We would recommend you to talk to one of our advisers for life insurance quotes.
Any quote that your adviser provides you with will take into account your circumstances, your medical history, as well as your budget!
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