Need help on how to arrange life insurance in Trust

j500_2

I'm arranging life insurance for myself and my wife and in need of a little help with it. I wanted to put the life insurance into Trust which I have read is a good idea to avoid paying inheritance tax on the payout which is intended just to pay off the mortgage. It seems simple enough to arrange the policies, I was thinking two separate life policies rather than a joint policy (which is meant to be better value in our circumstances as it pays out twice in the event we should both die say in a car crash, for little more premium.) I was thinking decreasing term to cover the amount outstanding on the mortgage, and with waiver of premium. The forms are available to put it into discretionary trust but don't know who to put down as beneficiaries. I guess its our daughters, we have two age 4 and 5, but not sure if it also should be my wife on mine and me on my wife's. Or would that defeat the object if the aim is to avoid paying IHT unnecessarily? If one of us dies the other spouse would benefit fine, but if we both die at the same time my payout would go to her estate and hers to mine and we'd be no better off. Who is normally named as beneficiaries in these circumstances? Also I was thinking of naming my brother who is only slightly older than me as the Trustee on both of them. Hope this makes to someone!
Thanks in advance.
J

amnblog

On a discretionary trust the potential beneficiaries are listed and the trustees have the power to decide whom from the list of beneficiaries benefits from the Trust.

Be careful, if you are including critical illness cover you need a split trust so that you can still personally benefit on a critical illness claim.

You cannot afford to get this wrong and life companies won't want to compromise themselves by advising you on how to deal with the Trust.

Why not let a broker sort the insurance out for you and you get the same product with qualified advice back by the advisor's indemnity insurance.

Let_Us_See

Firstly, do you have an IHT issue you are trying to address? Do you need two separate policies to protect your mortgage?

In the vast majority of cases a Joint Life First Death policy is the simplest option and probably one of the few policies that doesn't need to be written in trust.