Joint Life 1st death policies - trust questions

gallygirl

I've searched through the forum but can't find my specific query anywhere.

OH and I have 2 joint life 1st death policies (known to us as 'winner takes all '). They were not written in trust - don't know why.

We are not married and will both be liable for IHT on our estates. Am I right in thinking we need to have the policies written in trust to take them outside IHT? (I have asked both companies to send me the forms).

Also, what kind of trust - i have seen bare and discretionary mentioned but am not sure what is applicable here? I wasn't sure if the trustee could be the survivor, and does the cash just go to them fullstop if only one trustee named (I assume you also list beneficiaries if we both die?)

Thanks.

dunstonh

OH and I have 2 joint life 1st death policies (known to us as 'winner takes all '). They were not written in trust - don't know why.

With Joint owner, joint life plans, often you dont need the trust as the money is paid to the surviving owner. Depending on your personal circumstances, that in itself may be enough.

Am I right in thinking we need to have the policies written in trust to take them outside IHT?

No. The proceeds are not inside the estate on first death as you have joint owner.

ACG

You may want to still place them in trust though.

The reason being if you were to both be in the same aeroplane or something (sorry for being depressing on a saturday morning).

A Bare Trust basically means its extremelly to hard to make any changes to it. A discretionary trust is the one i would usually use.

For instance, if you have 1 child that you would like the money to go to both would allow this. If you then had another child5 years later, it would be much easier to add that child to the trust if its a discretionary trust.

Likewise, if you have 2 kids both are lovely but then when they grow up 1 becomes a druggy - you might not be too happy about half of a £200k policy being paid to them - a discretionary trust would make it easier to remove one.

It also doesnt have to be kids, it can be nieces, nephews, brothers, sisters, the local old folks home or Bernados - whoever you like.

gallygirl

Thanks. ACG we just want it paid to the other one so based on what dunston says I don't think we will need a trust? It was only for IHT purposes I thought it was needed.

All kids grown up & appear drug free so far , and if I did find myself pregnant I'd have more important things to worry about :eek:.

AndrewSmith

Another reason to ensure the policies are written in trust is that on death the proceeds would pass straight to the trust and bypass probate.