Life insurance and trusts

sandsy

Do policies have to be put in trust when they are first written or can it be done a few years down the line?

Can someone explain (in really simple words please!) the advantages of using trusts?

My husband and I both have matching term insurance policies for a significant sum insured.

Thank you.

SeniorSam

You should have received advice about this when you bought the insurance. However, presumable when either of you die, the insured amount will be paid to someone? Possible each other? If this is the case, then that insurance value will add to the value of your respective estates.

Far better to have them in Trust for a certain beneficiary. Ideally a Discretionary Trust so that the Trustees ( yourselves and possibly children?) can decide how the proceeds are distributed tax efficiently.

The benefit of the Trusts are that the value will not be counted in your estate if they pay out to each other. The value cannot be called upon to meet care costs, as the value is 'protected/shielded' by the Trust.

If the value if the life policies have accumulated since taking out the policy, then putting then into Trust now will be a gift, but it is not a problem doing this. Suggest you seek advice from an Independent Financial Adviser and also ask the provider of the policies why you were not been advised about this when discussing the policies as failure to do so is somewhat lacking in 'duty of care' to say the least.

Hope this helps

Sam