Life insurance into a trust

sukh38

Hi All,

I have a life insurance policy I am writing into a trust, but it is a life insurance policy that's in my wife and mines name, it is there to pay off the mortgage on the house in the event one of us dies, would it be best to write it into a trust or would it be easier to keep it as it is and have the funds paid directly to the outstanding balance of the mortgage? 

I live in England and the estate would fall into the higher tax bracket. 

Many thanks 

dunstonh

I have a life insurance policy I am writing into a trust, but it is a life insurance policy that's in my wife and mines name, it is there to pay off the mortgage on the house in the event one of us dies

Why do you think a trust would be beneficial? (normally you wouldn't bother in this scenario)

Weighty1

The money will pay out automatically to the surviving spouse and therefore there are few reasons why you would both writing the plan into trust.  You *could* with certain insurers as they have specific "30-day survival clause" to ensure the money is only paid into trust if you both die within 30-days of each other but in the main I'd not normally recommend it in most cases.

My_perfect_cousin

Bump. Is it viable to put an exiting joint life/first death policy in trust to move the payout on first death out of the surviving partner's estate for inheritance tax purposes? Would the 7 year inheritance tax timescale be relevant and if so, would the 7 years begin at the date of setting up the trust or at the date of the first death / release of the payout? many thanks.

dunstonh

Is it viable to put an exiting joint life/first death policy in trust to move the payout on first death out of the surviving partner's estate for inheritance tax purposes?

It is justifiable then, yes.  If it is not, then no.

The scenario on this thread, which you have bumped, would not be justifiable.

Would the 7 year inheritance tax timescale be relevant 

No because it never enters the estate of the joint owner. It is paid directly to the trust.