What is a trust?
Here's what you need to know about putting your life insurance policy into a trust
- Normally, placing a policy in trust is an 'irrevocable' act. This means once the policy is in trust this decision can't be changed later on, so it's important to carefully consider if putting a policy in trust is right for you.
- You can put a life insurance policy into trust as soon as it starts, or at a later date.
- There are different types of trust, but we offer three - fixed, flexible and split.
- This is done with LV= by completing a trust document which sets out the terms and conditions that the trust can operate under.
- Our Online Trusts tool can help you decide on the right type of trust and set everything up online. Please note this tool is only available for Protection policies, and it's not to be used with Bonds or savings plans.
The different types of trust
TRS notification
Trust Registration Service notification
As part of the UK's implementation of the Fifth Money Laundering Directive, new rules were introduced about trust legislation.
Trusts related to LV= protection plans that don't hold a surrender value won't need to be registered unless a claim is paid, and even then only in certain cases. Other types of policy held in trust may need to be registered. For further information please see our Trust Registration Service FAQs.
Should I put my life insurance policy into trust?
Understand both the advantages and disadvantages before taking out a life insurance policy in trust
Advantages of a trust
- The policy can't be taken out of trust later on, meaning the proceeds are paid to the right person or people. This way, you can be sure that when you pass away, the money goes where you want it to.
- Putting a life insurance policy into trust can be beneficial for those not married or in a civil partnership, as your partner can receive the funds as intended.
- Proceeds are paid out quickly; we won't need to wait for probate (which can sometimes take several months).
- Helps avoid inheritance tax - the proceeds won't normally be included in the deceased's estate and can usually pass tax-free to whoever is chosen as beneficiaries.
Disadvantages of a trust
- If a policy is written in trust, you cannot change your mind and take the policy back out of trust later on.
- Control over the policy is usually given to the trustees so you can't make changes to it. However, when using our Online Trust tool the forms automatically make the settlors a trustee so you still retain some ownership (to make changes).
- You can't benefit from the policy (this isn't usually a problem if you're the only policy owner, but it can get complicated with things like joint life policies).
Important information
Before we start, you should know…
If you're in any doubt, you should speak to a solicitor.
- There are different types of trust available, and it may not always be clear which should be used so if you're in any doubt you should seek legal advice.
- The information on this page shouldn't be taken as advice. Once you've put a policy in trust you can't change your mind later, so you need to be really sure that it's right for you.
Who is needed to set up a trust?
The settlor
This is the person or people who set up the trust and put their life policy into it. They are the current owners of the life insurance policy. The settlor chooses the trustees and decides who they would like the beneficiaries to be.
The trustees
These are the people responsible for looking after the policy put into trust on behalf of the beneficiaries who will get the money when the life policy pays out. We have produced a guide on what it means to be a trustee, which you can read below (PDF opens in a new tab.
The beneficiaries
These are the people who will get the money from the trust. Beneficiaries can be anyone, but most people make their children or spouse the beneficiary of their life insurance trust.
Types of trusts LV= offers
LV= offers three types of trusts - fixed, flexible and split
Guides on trusts and trustees for life insurance
Have a read of our guides - they might help you understand Trusts and Trustees in relation to life insurance policies or investments. You can get this and other documents from us in braille, large print or audio by contacting us.
How to use LV='s Online Trusts tool
Our Online Trusts tool will guide you through the process of setting up a trust
Answer the simple questions and once complete, it will take you to the most appropriate trust form we offer based on the answers you have given.
If you are happy to continue, complete the names and email addresses of all Settlors, Trustees (if applicable) and their witnesses.
Complete the remaining parts of the form online.
You will be prompted to sign the form. This can be done either using a touch screen or a mouse.
Once the first person has signed, the form will be automatically sent to the next person to complete their details and sign.
Once everyone has signed you will be notified via email that the signing process is complete and the form will be automatically returned to LV=.
Ready to set up your trust online?
Please note that when using the online trust tool, all involved parties, including witnesses, will receive a complete copy of the finalised trust. This means that the names and addresses of all parties will be visible to the witnesses. Witnesses should be aware that this information is protected under Data Protection legislation and must not be used or shared under any circumstances.
frequently asked questions
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