Making Life Insurance More Efficient through Trusts

If you are currently paying for life insurance that is not written into a Trust then it may not be the most efficient structure for you or your loved ones.

If your current policies are not written in Trust, when you die your life insurance will pay into your estate. For simplicity, we have illustrated this as a bucket.

If your life insurance pays into your estate, then it may:

1. Be subject to Inheritance Tax (IHT) at 40% - 40% of the value of your estate over £325,000 (2015/16) will be charged as Inheritance Tax (IHT).
2. Be subject to probate delay - Once you die, your estate will be frozen until probate is granted. This can take anything from 3 months to 18 months or more. During this period, no matter how serious their financial hardship, your loved ones will generally not be able to access the funds.
3. Be dispersed in line with Government guidelines and not directly to your loved ones - If you die Intestate (without a Will), the government determine how your estate, including your life insurance, is divided up. In some instances it will even go to the Exchequer.

We believe that you and your loved ones deserve more than the situation outlined above. We believe that every penny of the insurance policies that you pay for should go directly to your loved ones quickly and efficiently in their time of greatest need.

Through our complimentary review of your current circumstances, we can quickly determine if you are in the situation outlined above. If you feel this is unacceptable and that you and your loved ones deserve more then we can help you to address your needs.

We are extremely proud to be able to offer to protect you and your loved ones with appropriate life insurance policies and ensure that, where appropriate, these are written into Trust, as outlined below, at no extra cost to you or your loved ones.

Once we have helped you to implement this solution, when you die, your life insurance policies will pay into a discretionary Trust and not into your estate.

This has the following potential benefits:

1. With the correct planning, the proceeds would usually not be subject to Inheritance Tax (IHT) at 40% - the funds do not enter your estate and therefore are not subject to this tax in the same way as the first example.
2. The proceeds would not be subject to probate delay - as the funds are held outside of your estate (in the Trust), your loved ones will be able to get access to the cash as soon as practically possible. This ensures that your loved ones have the funds on a timely basis when they need them the most.
3. The funds would be guaranteed to go directly to your loved ones - you can determine who can and cannot benefit from the funds in the Trust. This can be stipulated during your lifetime and you can appoint people to ensure these stipulations are carried out.

Call 028 3833 8000 to arrange a meeting with your personal advisor and get a no obligation overview of our Trust service, or email us and we'll get right back to you.