Life Insurance - Trustee

Juliette100

I am curious about my role as a trustee or possible trustee as this subject is very new to me.  One of my sisters wishes to put her life insurance in trust and as the donor she wants to out me down as the trustee.  I just wanted to inquire what my tax obligations are on a discretionary trust.   I assume were the worst to happen that I would seek to claim the trust funds but then inform HMRC and tax, rather than IHT,  would be due?   The life insurance is set up not to increase - level plan and pays out a lump sum on death. My sister wants me as the trustee and overall I am fine with this but I have never held such a role and was curious.  Juliette

Old_Lifer

This is not a large Trust with a range of investments.      It is a life assurance  policy  which  pays- out  the sum assured should  the life assured die  during the lifetime of the  the policy.     Should this happen, your roll as  Trustee would be to distribute the money as laid down in the Trust Deed.

Old_Lifer

It  should perhaps be pointed-out  that should there be a delay in  distributing the policy proceeds,  any interest earned would be taxable.

Weighty1

And, if the sum assured is in excess of £325,000 then there could be a periodic charge of 6% of the amount held in trust over £325,000.  This is only chargeable if the money held in trust is over £325k on each 10-yr anniversary from when the trust is set up.

Chances are your sister isn't going to die so I'd worry about what your obligations are if the scenario ever arises

Juliette100

Everyone thank you.  I would be the trustee and beneficiary but it sounds like there isn’t a big role to play here.