Life Insurance in Trust, by accident

georgeousbabybear

It's one policy with my and my husband's name on it. I have a copy of the original form that I filled out. OK, it says on the form that it's a flexible gift trust. So given what you've said, that's not great news. That means we can only change who the beneficiary is, but that can't be one of us. BUT this is why I'm confused. The form says the settlers are us, the initial beneficiaries are also us, and the potential beneficiaries are our mothers. I don't understand! Surely that means that we get the money, unless that fails and then they get the money.

Weighty1

Aviva wouldn't have given advice on how the trust was set up, nor if there were any tax implications on how you've completed it, they would simply accept the trust form and register it against the policy.

If you have named yourself as beneficiaries but you are also policy owners as well you have, in effect, created a "gift with reservation". This means the insurance has been gifted into trust but you can still benefit from it. It's a long time since I did my studies so I can't recall what the implications of this are, however, it is likely to be some form of tax issue. Trusts can become *very* complex affairs so I've got a feeling that a specialist solicitor will be the best way of unraveling any issues which have been created.

georgeousbabybear

So I rang them, and this time they confirmed that the payout on first death would go to our partner if either was to die (because we named ourselves as beneficiaries). The only time it would go to my mum is if we both died at the same time. This is great, and what we wanted in the first place. The first person that told me it will go to my mum if either of us die, must just have given the wrong information. I will however look up what the 'gift with reservation' implications are, just so I understand it. Thanks for all of your help.