The Benefits of Putting a Plan in Trust

Taking out protection cover and putting them into trust can help you protect the financial future of your family and provide them with security and peace of mind.

You want to be sure that the right people will benefit from your policy at the right time. You can help this by putting your policy in trust for no extra cost.

There are two main benefits of putting your policy in trust:

1. Save time and reduce the worry with immediate payment on your policy

A life cover claim is made at a stressful time for the family, with both emotional and administration issues to be taken on board. A trust can pay the life cover to the trustees to pay monies over to a beneficiary straight away so that their financial position remains sound and they can focus on the future.

If the policy was not under trust then there would be a delay in payment until probate, when the Will is deemed to be valid, or letters of administration are obtained. This can often take up to six months.

2. Reducing your Inheritance Tax liability

When you write your policy in trust, your premiums are known as gifts for Inheritance Tax purposes and can usually be covered by generous exemptions. The proceeds will not form part of your estate, where Inheritance Tax becomes payable on assets over £325,000 (tax year 2010/2011).

There are various types of trust available for you to choose - contact our financial advisers today who will be able to discuss these with you.

Your financial adviser will be able to give you advice on the benefits of writing your policy in trust. If you decide that a trust is the best way forward they can advise you on the most suitable trust based on your needs.

Even if you do not use a trust at outset, the good news is that we can provide specific versions of one for use with existing policies.

There are 3 main roles involved in a trust:

1. The settlor

The settlor is the person who sets up the trust. They will appoint trustees to administer the trust and decide who the beneficiaries will be. They will also provide the property that will be held by the trust.

2. The trustees

The trustees will manage the trust fund for the beneficiaries. This includes making any claim under the protection plan and, if appropriate, investing any money paid out from that claim.

3. The beneficiaries

The beneficiaries will receive the trust fund in line with the settlor's wishes.

Our protection experts will be able to advise you on putting your policies into trust and can talk you through any queries you may have.

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