Life Insurance Absolute Trust

luklik

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Weighty1

Why an absolute trust?
In my 13-years of advising I have never used an absolutely trust.  Flexible and Discretionary trusts are much more common and the IHT advantages of absolute trusts are not as good as these alternatives since the trust is guaranteed to pay to your child so is seen as their asset.

In addition, using a trustee in a foreign country makes the process far more difficult as ideally if a claim is made your husband and sister would need to open a joint bank account which needs both their signatures to withdraw money.  This way, you can make sure that neither one of them can run off with the money.  Having someone in a foreign country trying to open a UK bank account is going to be extremely difficult.

In regards to question 3.  If you have just your husband and he dies then the executor of his estate would then become a trustee.
4) As long as the trustees agree on why the money is being taken out of the bank, it is no more difficult than taking your own money out, although your trustees may need to visit the actual bank if the withdrawal needs both the signatures.

5)  Once the money is paid into trust, the trustees can do whatever they wish with it, so yes, they can withdraw all the money and transfer it overseas.  Obviously, it would then become subject to the taxation of the country to which it has been sent.

luklik

Thanks so much for your time and replies. I agree now that Discretionary trust is a good option.
I have 1 quick question please.

According to your answer,
"In addition, using a trustee in a foreign country makes the process far more difficult as ideally if a claim is made your husband and sister would need to open a joint bank account which needs both their signatures to withdraw money.  This way, you can make sure that neither one of them can run off with the money.  Having someone in a foreign country trying to open a UK bank account is going to be extremely difficult."

To avoid the issue of opening Bank Account difficulty for a non-UK resident, I have heard that Life insurance company can also pay trustees in cheque. If my sister (one of the trustees who is non-UK resident), jointly receive the money with the other UK resident trustee by cheque. Is there any ways we can cash a cheque without open a joint bank account?

Many thanks.

Weighty1

If the life insurance company pay the money out as a cheque then I would expect them to have ALL trustees named on the cheque as they are all jointly responsible and have joint ownership of the money.

The only way to find out is to call the insurance provider and see what they say.