Life Insurance and Tax

Hi

I have a life insurance policy which currently pays out £1.2m to my wife on my death only, as well as employer's death in service of £400k.

We have 3 children and £250k left on a mortgage on a property worth £750k. I would like the mortgage to be settled on the event of my death.

Do I need to create a Trust to avoid my wife paying inheritance tax or does she get 100% tax free?

Should I split the Trust to include the children to be more tax efficient? 

Any pointers would be much appreciated.

Many thanks

James

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