Life policies, writing to trust.

cooliegirl

Hi

I have 2 life policies, one for my children which I am writing to trust to be divided equally to them and another which is to cover the mortgage.

My mortgage is in my name but my husband and I will eventually move home and to a joint mortgage. I want to ensure that if I were to die that at least 50% of the mortgage will be paid from this policy and the balance to go to my estate which will then be shared out as per my will.

How is best to achieve this?

Thanks

ACG

The first one is straight forward enough Bare or Discretionary trust should do this for you, i tend to use discretionary trusts (also known as flexible trusts).

The second one is also straight forward enough, you will have a letter of wishes section - just put on there 50% to your husband the rest divided 3 ways (or to protect for the future incase you have more kids thenm maybe it should say "divided equally between your children"). You dont want any of it going to your estate though - the reason being is that half would go to your husband as thats how the laws of intestacy work unless you have a will to say otherwise. Your husband can not be a trustee on this second policy however as he will also be a beneficiary.

Hopefully that hasnt confused you too much. Trusts arnt difficult but when your completing them you feel like you need a degree in english language to understand ithe workding.

For the second pol

cooliegirl

ACG wrote: »

The first one is straight forward enough Bare or Discretionary trust should do this for you, i tend to use discretionary trusts (also known as flexible trusts).

The second one is also straight forward enough, you will have a letter of wishes section - just put on there 50% to your husband the rest divided 3 ways (or to protect for the future incase you have more kids thenm maybe it should say "divided equally between your children"). You dont want any of it going to your estate though - the reason being is that half would go to your husband as thats how the laws of intestacy work unless you have a will to say otherwise. Your husband can not be a trustee on this second policy however as he will also be a beneficiary.

Hopefully that hasnt confused you too much. Trusts arnt difficult but when your completing them you feel like you need a degree in english language to understand ithe workding.

For the second pol

Thanks, yes I've been putting these off for months because they are quite daunting!

Letter of wishes - By saying 50%, does this mean 50% of the fund? If the mortgage was very low, then 50% of the policy would seem like a large sum to leave for one person whereas paying off 50% of the outstanding balance of a mortgage would be much lower. Am I making sense or confusing myself!

My will states that my 'estate' will be equally divided between my children with a small % to go to my husband. Does this sound okay? I know that everyone is different as to how they organise their will and it's down to the individual, but I feel that my children should be the major beneficiaries. I do however want to make sure that at least half of the mortgage gets paid to ensure that my hubby wouldn't have to struggle with the bills and raising the children if the worst happened.

Finally, if I wanted to ensure that the trustee of these policies put a % of the money into trust for the children until they were of a certain age, how would I do this?

ACG

Im not sure you can stipulate the trust must be used to clear half of the mortgage (i cant see any reason for it but i have never had that come up).

Also the trustees have a duty of care to look after the money as they would their own - it could be a case of putting it in an isa or savings account or something more in depth such as investments if your kids are really young.

Thinking about it, i suppose you could say something along the lines of (this is for the second policy as the first one i think we are ok with?) i would like an amount of half of the outstanding mortgage on the date of my death to be paid to my husband with the remaining balance to be divided equally between my children. That way your husband has the money to do what he wishes with. If you do stipulate it has to go on the mortgage straight away the mortgage could incur early repayment charges which defeats the point. Dont use that as the exact wording but something along thos lines.

I know this bit is none of my business - but it could be worth discussing this with your husband before hand if you havnt already. Money can have a bad effect on people so at least then it wont come as a shock. (Sorry i know its none of my business but it could avoid a family argument etc).

With regards to it being daunting dont worry. I had to learn the ins and outs of trusts in about 3 days before a campaign i was part of when i worked in a life office. Once you get your head around it, youll wonder why you ever worried.

Maybe see an Insurance Advisor or Solicitor. Or if the policies are recent get the advisor who set them up to do it for you - he should have discussed it with you as part of his advice process.

cooliegirl

ACG wrote: »

Im not sure you can stipulate the trust must be used to clear half of the mortgage (i cant see any reason for it but i have never had that come up).

Also the trustees have a duty of care to look after the money as they would their own - it could be a case of putting it in an isa or savings account or something more in depth such as investments if your kids are really young.

Thinking about it, i suppose you could say something along the lines of (this is for the second policy as the first one i think we are ok with?) i would like an amount of half of the outstanding mortgage on the date of my death to be paid to my husband with the remaining balance to be divided equally between my children. That way your husband has the money to do what he wishes with. If you do stipulate it has to go on the mortgage straight away the mortgage could incur early repayment charges which defeats the point. Dont use that as the exact wording but something along thos lines.

I know this bit is none of my business - but it could be worth discussing this with your husband before hand if you havnt already. Money can have a bad effect on people so at least then it wont come as a shock. (Sorry i know its none of my business but it could avoid a family argument etc).

With regards to it being daunting dont worry. I had to learn the ins and outs of trusts in about 3 days before a campaign i was part of when i worked in a life office. Once you get your head around it, youll wonder why you ever worried.

Maybe see an Insurance Advisor or Solicitor. Or if the policies are recent get the advisor who set them up to do it for you - he should have discussed it with you as part of his advice process.

Great, thanks for the info

ACG

http://www.friendslife.co.uk/doclib/xg248.pdf - page 3 on the right hand side. Its relelvant whichever company your policy is with but this is just one i have saved.