Pre 2006 Skandia Life insurance flexible power of appointment trust

SilverBerry46

My late relative had a whole of life insurance policy called The Skandia Plan which was set up in 1992.  The policy had a small investment element which was used by the insurance company to pay for their admin charges to keep premiums lower as she got older.  It states in correspondence that *The main purpose of the policy is to provide you with life cover so it is not designed to be used as a savings plan".  The policy was set up under a pre 22 March 2006 flexible power of appointment trust giving an immediate interest in possession to her sons, named as the immediate beneficiaries although there was also a list of possible beneficiaries. 

We understand that the monthly premiums paid in the last 7 years before her death are treated as potentially exempt transfers, which are way below the £3000 annual exemption for IHT, so should be no IHT to pay on that.  However, we are not quite sure whether, now that the life assured ie the donor/trustee has passed away, her immediate beneficiaries are now the trustees and whether this now needs to be registered as a trust with HMRC.  The insurance company was extremely slow at sending us a copy of the trust, so we have only just found out what type of trust it is and the details.  From reading HMRC guidance, it would seem that is is exempt from the need to register, if money paid to beneficiaries within 2 years of death of life assured, but not being experts, it is hard to be sure and not always clear if this applies to pre 2006 trusts or to post 2006 ones.

Also the insurance company is now asking the sons whether they want to surrender/cash in the policy or make a claim and we are not sure what we should be saying to that, as don't want any unintended tax consequences.  Basically the immediate beneficiaries just want to take the life insurance proceeds and for the trust to end.  Hopefully, someone else has had experience of these type of old life insurance policies and older trusts. Can anyone advise as to how this works, do the beneficiaries need to register the trust and how to get it paid out without causing any problems.  The insurance company initially asked for details of an account that the proceeds could be paid to and for simplicity one of the sons gave his bank details, with a view to passing the other 2 beneficiaries their share.  Would that cause a problem, should the money be paid to each of the beneficiaries bank accounts?  Any advice would be greatly appreciated as this is causing a lot of confusion.  Incidentally the sum assured is now less than £6k but over £15k of premiums paid over her lifetime - so not the best decision! 

Jai18

Is there any deed for the appointment of additional trustees,, your Relative would be 1 trustee, if there is no other trustees appointed then the funds would be part of the estate for the relative who created the trust...
The assignment for the policy, should be done by the trustees, and assignment to the beneficiaries, maybe talk to citizens advice, or talk to the trustees, if any.