What is a trust?
A trust is a legal arrangement that lets the owner of a plan ‘gift’ it to someone else; this can be anything from, shares, pensions, properties, and importantly life insurance policies. This is done by creating a trust deed. The deed sets out the terms and conditions that the trust will operate under, these are known as trust provisions.
Why is a trust so important?
Inheritance tax – This is a sore subject for many in the UK, as the government will potentially tax estates at 40%, if the life policy is written in trust, there will not be any liability of that policy.
Beneficiaries – Having a plan in trust gives you the option to nominate your beneficiaries, so you know you will be benefiting from the proceeds.
Efficiency – When someone passes away with a policy in trust, they won’t need probate for the purpose of the plan, so monies can be transferred within a quicker timescale.
You should always seek advice to see if it is suitable to put a policy in trust.