Life Insurance in Trust: Beneficiary Kids or Wife?

Noodle302000

Originally posted in Life Insurance section but more of a tax question....was told I could set up trust to benefit both wife and kids but thats not really the question:

Hi Thanks in advance for any replies.

Thinking of putting new £500k life insurance policy in absolute trust to prevent being captured by IHT.

What I am trying to work out is if I leave my partner as beneficiary, am I just making the onward IHT bill to the children bigger (eg if death was co terminous etc - as she has significant assets of her own)......

So I guess I could make the children the beneficiary of the trust and therefore avoid an intermidary step of IHT if the worst was to happen and we were to both bite the dust (morbid!)....

My hesitation is around what happens if I just die? Can I leave it in trust for the children but allow my partner to use the funds at her discretion (eg to service the mortgage etc - which is obviously for the benefit of the children).....or will this result in being captured by IHT as its not absolute trust?

The ideal situation seems to be in trust for the children but with partner to be able to dip into it as necessary?

Thanks

xylophone

http://www.moneysupermarket.com/c/news/make-sure-your-life-policy-is-written-in-trust/0026412/

Take appropriate advice (you and your wife) from solicitors experienced in wills and trusts? http://www.step.org/online-directory

Noodle302000

thank you!!!