Life Assurance Trust Question

englishdesi

Hi All,

I recently took out a Life Assurance Policy via Cavendish Online with Norwich Union so that a fixed sum is paid out in the event of something happening to me.

My question is, would the payout to my loved ones be taxed?

I read somewhere I could fill in one of these trust forms, once the policy has been taken out so that any payout would not be taxed. Can anyone advise what to put in there etc to make it compliant ?

Thanks for all your help

dunstonh

My question is, would the payout to my loved ones be taxed?

Depends on how the policy is written. e.g. who you specified were the policy owner(s) and the life assured(s) and what your personal situation is.

If you wrote it with you as owner and as life assured or didnt place it in trust and you are unmarried then the money goes into your own estate and would be included in the inheritance tax calculation. That could see upto 40% of it wiped out in tax just because you didnt write the policy correctly.

Can anyone advise what to put in there etc to make it compliant ?

There are different trusts you can use and it depends on how the policy is written and what you want to achieve. You can get advice on this from an IFA or solicitor otherwise you will have to look at the providers own trust forms to decide which is the closest match for your needs.