Life Insurance in trust - Beneficiary Question

kungfuman

I have two life insurance policies that I wish to be placed in trust, one with aviva and the other with legal and general. If I die I would want the money to go to my wife and if for whatever she doesnt survive too, then the money to be used to raise our kids.

Do I must state explicitly in the trust forms who the beneficiaries are or will the trust pay 'default' beneficiaries in succession? i.e. it will naturally go to my wife and then to my kids if she doesnt survive.

kingstreet

If you use a discretionary trust, it has beneficiary classes, such as "spouse at date of death", then "children in equal shares" etc.

If you use a bare trust, it will require you to enter names and the percentage share you wish them to receive.

The discretionary trust is much more flexible in being able to manage future life changes.

Weighty1

It's important to be aware that if you use a flexible/discretionary trust then no matter who you nominate as being the beneficiary of the proceeds the trustees "could" chose to distribute the money to someone else as the trustees have absolute authority over the money. That is why it is important to ensure your trustees know exactly how you wish the money to be distributed. You can write a "letter of wishes" which explains your wishes to the trustees and generally can provide a lot more detail than you can on a trust form. Whilst not legally binding it ensures they are aware of what you do and don't want to happen.

kungfuman

Think that answers my question. Yeah I would like the trust to be flexible and fully managed by the trustees. Both forms I've received from Aviva and L&G are for discretionary trusts.

So just to absolutely clear, there is no obligation for me to state any beneficiaries in the form, as the trustees will ultimately decide who it goes to?

Also, is it ok for a trustee to be a beneficiary of the trust? I plan to include my wife as a trustee.

HappyHarry

So just to absolutely clear, there is no obligation for me to state any beneficiaries in the form, as the trustees will ultimately decide who it goes to?

Yes - that's correct.

Also, is it ok for a trustee to be a beneficiary of the trust? I plan to include my wife as a trustee.

Yes - it would be unusual for your wife not to be a trustee. The only concern would be if your wife happened to live abroad. If she is living in the UK, then she would be an ideal trustee.

You will need a second trustee, obviously not yourself (as you'll be dead). Ideally, someone that your wife could rely on at such a time.

Weighty1

kungfuman wrote: »

Think that answers my question. Yeah I would like the trust to be flexible and fully managed by the trustees. Both forms I've received from Aviva and L&G are for discretionary trusts.

So just to absolutely clear, there is no obligation for me to state any beneficiaries in the form, as the trustees will ultimately decide who it goes to?

From memory the L&G discretionary trust doesn't even provide space to insert any beneficiary names (their flexible trust does, which is also a discretionary trust!!). On the Aviva form I personally would include the name of my chosen beneficiaries. It's non-binding on the trustees so there's no reason not to.

Also, is it ok for a trustee to be a beneficiary of the trust? I plan to include my wife as a trustee.

Yes. Trustees must be over the age of 18 and of sound mind and some providers state that they must also reside in the UK, however, being a trust and beneficiary is fine.

kungfuman

thanks very much for the replies