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Putting your policy into trust

Ensure that if the worst happens, your money goes to the right place

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Overview

Before we start, you should know…

If you're in any doubt, you should speak to a solicitor.

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  • 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.
 
What is a trust?

Here's what you need to know about putting your life insurance policy into trust

  • A trust is a legal arrangement that lets the owner of something 'gift' it to someone else. This could be shares, a home, cash, or a life insurance policy.
  • This is done by creating a trust deed which sets out the terms and conditions that the trust can operate under.
  • 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 two - fixed and flexible.
 
Should I put my policy into trust?

Take a deeper look into the advantages and disadvantages

Advantages

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  • Proceeds are paid to the right person/people.
  • 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

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  • The policy can't be taken out of trust later on.
  • Control over the policy is given to the trustees so you can't make changes to it.
  • 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).

We have two types of trusts - fixed and flexible

Below are the differences between these two trusts:

Fixed Flexible
Can the beneficiaries be changed later on? No Yes
Who are the beneficiaries? Exactly when you name when you set it up You choose potential beneficiaries when you set up your trust. You also choose who should benefit if a claim were made straight away (the default beneficiaries). The trustees can pay trust funds to any of the potential beneficiaries.
What changes can the trustees make? None The trustees have the power to change the 'default beneficiaries' to any of your 'potential beneficiaries'.
Who decides how much each beneficiary gets? You do when you set up the trust. You do when you set up the trust, but the trustees have the power to change this.

Fixed Flexible
Can the beneficiaries be changed later on? No Yes
Who are the beneficiaries? Exactly when you name when you set it up You choose potential beneficiaries when you set up your trust. You also choose who should benefit if a claim were made straight away (the default beneficiaries). The trustees can pay trust funds to any of the potential beneficiaries.
What changes can the trustees make? None The trustees have the power to change the 'default beneficiaries' to any of your 'potential beneficiaries'.
Who decides how much each beneficiary gets? You do when you set up the trust. You do when you set up the trust, but the trustees have the power to change this.

Trustbuilder tool

Our trustbuilder tool is here to do the hard work for you

How to use the Trustbuilder

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It’s a simple and straightforward way to put your protection policies into trust. We’ll guide you through the steps of setting up a trust.

  • We'll ask you a few questions about you and who you want your life cover to be paid out to when you die.
  • You can then complete the form online and it'll create the trust deed for you to print out.
  • You'll then need to sign the deed and have your signatures witnessed by someone who is independent (not a trustee, beneficiary or anyone involved with the trust) and post it to us using the freepost address.

What you need to know

Checklist
  • You can only put our LV= life protection products in trust. Once you've put your policy in trust, you can't change your mind at a later date.
  • Before you complete and sign the deed, make sure you've considered if placing your policy into trust is the right thing to do. If you're in any doubt, you should speak to a solicitor.
  • Make sure you read the documents below to understand trusts and trustees before you start the LV= Trustbuilder.
guides

Trustbuilder guides

Have a read of our guides - they might help you understand Trusts and Trustees. You can get this and other documents from us in braille, large print or audio by contacting us.

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