Confused- writing life assurance into trust

FGR

Hi everyone, I'm new to the forum but have been using the information here for my first property purchase. My husband and I have taken out a joint life assurance policy with Legal & General- decreasing term to cover the mortgage. I want to write the policy into trust, I thought I understood how to go about it but am now totally confused and would appreciate some help!

Our broker sent me 3 forms to choose from, so a choice of a discretionary trust, flexible trust or absolute trust. Having read through them it sounded like discretionary trust was the right one to use, but when I inspected the small print it looks like if we set up the trust together we can't also be the beneficiaries. Am I looking at the wrong sort of trust altogether, or should we both separately be setting one up with the other as beneficiary? Would be grateful if anyone could point me in the right direction. Thanks!

kingstreet

If the plan is joint life first death, why do you want to write it in trust? Who are the potential beneficiaries other than you two?

In the event of death, a joint life first death plan pays out to the survivor, so many people don't write such plans in trust. You may wish to consider a trust if you are concerned about dying close together and have young children to provide for, but there are tax implications in doing this...

Professional advice needed, methinks.

dunstonh

If you bought through an adviser then the adviser should do this and pick the right trust or even tell if a trust is needed. If you bought without advice then you have to do it. You say you used a broker. Was that advised or non-advised?

Do you even need a trust?

FGR

Thanks for the quick replies- the broker explicitly is not advising me on this- this seemed to be something I could do by myself but perhaps I do need professional advice in this case. The intent of writing the policy in trust was for inheritance tax purposes, but that may not be appropriate for a joint policy intended to repay the mortgage in the event of one of us dying?

warwicktiger

There is no inheritance tax on transfers between husband and wife.

If the policy is not in trust then the beneficiary on death would be the survivor.

If you wish the beneficiary to be someone other than the survivor then put it into trust by all means.

Absolute trust - value is to be paid to a named beneficiary, very difficult to alter later.
Discretionary Trust - Trustees have the power to decide who should receive a payout.
Flexible trust - has a named intended beneficiary but trustees have the power to vary it.

Depends exactly what you are seeking to achieve which way you should go.