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    • georgeousbabybear
    • By georgeousbabybear 10th Mar 18, 9:07 AM
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    georgeousbabybear
    Life Insurance in Trust, by accident
    • #1
    • 10th Mar 18, 9:07 AM
    Life Insurance in Trust, by accident 10th Mar 18 at 9:07 AM
    I was looking for some advice. My husband and I took out fixed term life insurance 9 years ago when we bought our first house together. We filled out a form at the time that stated we'd want the money to go to our mothers if we both died. Unfortunately, my husband's mum died a while ago and so I rang up Aviva to change who the policy goes to, if we both died at the same time. Turns out, we have put our life insurance policy into trust for our mothers. This was not what we intended when filling out this form! So this means that if I or my husband die, the money will go to my mother, not the surviving partner. This is really not what we wanted. Does anyone know how we can change this without cancelling the policy and taking out a new one? I've looked up new policies of the same pay out and they are nearly twice as much as we're paying now, so don't want to take out a new one.
Page 1
    • tacpot12
    • By tacpot12 10th Mar 18, 9:25 AM
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    tacpot12
    • #2
    • 10th Mar 18, 9:25 AM
    • #2
    • 10th Mar 18, 9:25 AM
    It will depend on whether the life policy was setup to pay out on the first death or the second death.

    If it is setup to pay out on the second death, then you will need a new policy (one written to pay out on the first death).

    If it is setup to pay out on the first death, then you should be able to change the nomination of who should receive the pay out by letter. Just write to Aviva and say that you are retracting any previous nominations made and now wish that, in the event of the death of either one of you, you would like the payment to be made to the survivor, or if the survivor dies before the payment has been made, to your mother (or anyone else you now want to include).

    Aviva should keep this letter on file and follow your wishes in the event of an untimely demise.
    • ACG
    • By ACG 10th Mar 18, 9:44 AM
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    ACG
    • #3
    • 10th Mar 18, 9:44 AM
    • #3
    • 10th Mar 18, 9:44 AM
    I think it will depend on the type of trust (not the type of policy).
    The trustees can alter the beneficiaries I believe.

    It has been many years since I was heavily involved in trusts and a lot of his gone out of my head, but it might worth speaking to the insurer again or the advisor who set the policy up for you.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • dunstonh
    • By dunstonh 10th Mar 18, 11:40 AM
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    dunstonh
    • #4
    • 10th Mar 18, 11:40 AM
    • #4
    • 10th Mar 18, 11:40 AM
    Did you set up a flexible trust or an absolute trust?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • georgeousbabybear
    • By georgeousbabybear 10th Mar 18, 5:31 PM
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    georgeousbabybear
    • #5
    • 10th Mar 18, 5:31 PM
    • #5
    • 10th Mar 18, 5:31 PM
    Thanks all, I don't know what type of trust it is, but they said that I can change the beneficiaries, so perhaps that means it's a flexible one. The policy is due to pay out on the first death. Apparently, a trustee can't be named as a beneficiary (now it's been set up as a trust). I did try to ring them and explain the situation and they just said I should have got legal advice when I set up the trust, but given I didn't know I was setting up a trust when I filled out the form, it's not a particularly helpful thing to say!
    • sheramber
    • By sheramber 11th Mar 18, 12:20 PM
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    sheramber
    • #6
    • 11th Mar 18, 12:20 PM
    • #6
    • 11th Mar 18, 12:20 PM
    Do you mean you and your husband are trustees and your mother the beneficiary?

    What happens if your mother dies?
    • georgeousbabybear
    • By georgeousbabybear 11th Mar 18, 12:44 PM
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    georgeousbabybear
    • #7
    • 11th Mar 18, 12:44 PM
    • #7
    • 11th Mar 18, 12:44 PM
    Yes, that's the way it's set up at the moment. I have no idea what happens if my mum dies.
    I've checked and it's a flexible trust
    • Novice investor101
    • By Novice investor101 11th Mar 18, 2:58 PM
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    Novice investor101
    • #8
    • 11th Mar 18, 2:58 PM
    • #8
    • 11th Mar 18, 2:58 PM
    Sounds like you filled out the wrong trust forms. There's the flexible gift trust that benefits someone else & not the policy owners (ie your mother) on the first death of either of you. Then there's a survivor trust, which means if one of you dies the surviving policy owner gets paid out but if you both die together then someone else (your mother?) would get the pay out.
    These are the two trusts that Aviva use.
    Did you fill out one of their trust forms?
    You can ask to alter who the beneficiary is & to alter the trustees & the will send the forms to do it, as long as you used their own trust forms.
    I don't think you can cancel the gift trust & change it to the survivor trust.

    Also, who advised you when you first signed these forms? Or did you ask for them to send the forms & you did it yourself? If it was an FA, you need to have a chat with them!
    Aviva have a standard speil that they can't give advice, & will always tell you to see an FA or solicitor - as they're not FA's or lawyers!

    Trusts can't just be cancelled, they're legal documents. If you can't alter the policy how you want then you need to see a solicitor.

    NB: I think the Trustee & Beneficiary can be the same person on the gift trust, it just can't be the same person who is the policy owner & life assured (the settlor) - ie persons A & B are the owners & people life assured, person C can be trustee (as can A&B) & beneficiary but neither A or B can be the beneficiary.

    When I put my policy into trust, all the above was explained by my will writer & he had a booklet from Aviva explaining it all too. Did you get one of those? Or can Aviva send you one?
    Last edited by Novice investor101; 11-03-2018 at 3:09 PM. Reason: Added info.
    • Novice investor101
    • By Novice investor101 11th Mar 18, 3:04 PM
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    Novice investor101
    • #9
    • 11th Mar 18, 3:04 PM
    • #9
    • 11th Mar 18, 3:04 PM
    What happens if your mum died is you nominate a new beneficiary using variation forms.
    That new beneficiary can't be you or your husband, tho. Do you have any children at all?

    Seriously, if an IFA issued you the forms to set up the trust you may have cause to make a complaint to them.
    If you asked Aviva for their forms you could make a complaint for them to investigate if you asked for the right forms & they sent the wrong ones, or told you wrong information.

    Other than that, it's consult a solicitor time.
    • georgeousbabybear
    • By georgeousbabybear 12th Mar 18, 10:25 AM
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    georgeousbabybear
    Thanks for pointing out that there are 2 types. I didn't know that. When I filled out the form I thought I was just ensuring that if we both died together that our mothers got the money. Therefore, because we are named and then they are named i think it's the survivors trust that we've filled out. However, when I spoke to aviva they seemed to say that my mum would get the money if I died (which is where I was confused). Perhaps I will ring them again and double check that they gave me the correct information. Because it sounds like if I really do have the survivors trust then everything is ok?

    I filled out aviva forms. I didn't ask for the forms, they were in the pack they sent to me when I took out the policy. And I just thought, that's a good idea to ensure our mums gets the money if we both die so I filled it out. I haven't received a booklet from them on the trusts.

    We don't have any children (and wont be having any) so Im not sure what we'll do when mum dies. We'll have to name someone else, but it still comes down to the fact that if I die, I want the money to go to my husband to help pay the mortgage off etc. Not my mother or anyone else!

    In terms of speaking to a solicitor, any recommendations? Is there a particular type of solicitor I need to talk to?
    • Novice investor101
    • By Novice investor101 12th Mar 18, 7:33 PM
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    Novice investor101
    First thing to do would be to call Aviva & ask to speak to someone who can explain what trust you have set up & how it works. Until then it's just guess work.
    So do that first. You can always ask them to send you a copy of the firm's you filled out, too.
    If you still need a solicitor then at least you have some information to go to them with.

    Is it one policy with both you & your husband on it or do you have one each in your own names?
    • georgeousbabybear
    • By georgeousbabybear 13th Mar 18, 10:24 PM
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    georgeousbabybear
    It's one policy with my and my husband's name on it. I have a copy of the original form that I filled out. OK, it says on the form that it's a flexible gift trust. So given what you've said, that's not great news. That means we can only change who the beneficiary is, but that can't be one of us. BUT this is why I'm confused. The form says the settlers are us, the initial beneficiaries are also us, and the potential beneficiaries are our mothers. I don't understand! Surely that means that we get the money, unless that fails and then they get the money.
    Last edited by georgeousbabybear; 13-03-2018 at 10:37 PM.
    • Weighty1
    • By Weighty1 14th Mar 18, 9:32 AM
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    Weighty1
    Aviva wouldn't have given advice on how the trust was set up, nor if there were any tax implications on how you've completed it, they would simply accept the trust form and register it against the policy.

    If you have named yourself as beneficiaries but you are also policy owners as well you have, in effect, created a "gift with reservation". This means the insurance has been gifted into trust but you can still benefit from it. It's a long time since I did my studies so I can't recall what the implications of this are, however, it is likely to be some form of tax issue. Trusts can become *very* complex affairs so I've got a feeling that a specialist solicitor will be the best way of unraveling any issues which have been created.
    • georgeousbabybear
    • By georgeousbabybear 16th Mar 18, 1:08 PM
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    georgeousbabybear
    So I rang them, and this time they confirmed that the payout on first death would go to our partner if either was to die (because we named ourselves as beneficiaries). The only time it would go to my mum is if we both died at the same time. This is great, and what we wanted in the first place. The first person that told me it will go to my mum if either of us die, must just have given the wrong information. I will however look up what the 'gift with reservation' implications are, just so I understand it. Thanks for all of your help.
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