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 three - fixed, flexible and split.
Our Online Trusts tool can help you decide on the right type of trust and set everything up online.
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.
Should I put my policy into trust?
Take a deeper look into the advantages and disadvantages
The policy can't be taken out of trust later on meaning the 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.
If a policy is written in trust, you cannot change you 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).
setting up a trust
Who is needed to set up a trust?
These are the people who will get the money from the trust.
This is the person or people who set up the trust and put their life policy into it. So 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.
These are the people responsible for looking after the policy put into trust on behalf of the person or people who will get the money when the life policy pays out - the beneficiaries.