Life insurances in to trust?

dojoman

We have bought back our BI on our life insurance policies, am I right in thinking that if anything did happen to us before we were discharged the proceeds would go to the OR? Also I have applied to the insurance companies, to put these policies in to trust for our children just in case anything did happen. If we do that then am I right in thinking any proceeds would not go to the OR? Also, if we do not put them in to trust, once we are discharged and anything happened would the proceeds then belong to us. The reason I am asking, is that I have received the forms to put one of them in trust, and was wondering if anyone else had actually done this?

script

Hi Dojoman,

You're right - if you pop off before you are discharged the OR gets the money.

If you pop off after you're discharged your beneficiaries get the money - providing that you bought the "interest in the policies" - which you have.

Best not to have a beneficiary who is bankrupt because they'll lose it to their OR.

The safe bet is - whilst you are undischarged - have the policies put in trust - to pay the beneficiaries - in your case your children.

Doucam

Can I just ask, if something did happen and the Or took the money, surely they would only take what the original BR debt was and their fees, and give the rest back? Or am I being a bit naive here?

script

Yes you're right - only up to the total debts in the bankruptcy plus the costs.

Just hope that an IP trustee has not been appointed - because they are not exactly shy on the fees they charge.