Joint Policy vs Single Policy life assurance

sweetchuck_2

I realise that there is lots of advice already on this forum but I can’t seem to find an answer to a particular question.

I’m looking to set up a joint life assurance policy for my wife and I, to be paid on first death for 500k to cover living expenses, mortgage costs etc for the remaining partner and our daughter. I was therefore anticipating naming my wife and I as beneficiaries in case of first death, which should be free of IHT liability (?)

I am unsure of the IHT consequences in the event of simultaneous death so had been thinking about using a trust. However I see that you cannot name yourself as a beneficiary on a joint policy. If we were therefore to use a trust, would we then name our daughter as sole beneficiary? In the event of a single death, the funds would therefore be released to her (she’s only 6 months old), but would the surviving partner have access to the funds in any way?

Bottom line I guess, is should we instead get 2 separate polices in trust and name the other + child as the beneficiary?

Sorry for the lengthy post for what is probably a straight forward answer. Thanks.

OshayAway

I'm afraid you may not like my straight-forward answer which is get advice from an IFA or protection specialist. It's not worth the risk getting it wrong.

sweetchuck_2

Thanks for your reply, much appreciated

I understand that an IFA may be beneficial but I had (perhaps wrongly) assumed that my requirements were pretty standard in this instance.

Cheers

kingstreet

They are pretty standard.

You can write a joint policy and the benefit automatically goes to the survivor, so there's no issue over beneficiaries. As you're married, there's also no IHT implications.

With what you're looking to do, you should write the policy in trust. The first beneficiary will be your surviving spouse and the contingent beneficiary will be your daughter (although children at point of death is probably the default option).

Writing in trust means no IHT implications even if the benefit is ultimately paid to your children and it can be paid quickly and without need for a will or probate.

You might like to combine your appointment of trustees with your will establishing who should have custody of your daughter until she reaches a certain age.

If you decide which insurer you wish to use for your cover, they should have a fairly simple trust form for you to use. For a joint life plan, you'd probably use a discretionary joint life, first event gift trust.

You might also like to think about writing separate policies, also in trust. It may not work out much more expensive and it would mean the survivor's cover would continue in the event of one partner being deceased.

sweetchuck_2

Kingstreet - thanks very much for your reply.