Some Fast Facts
RIGHT PEOPLE - Insurance Trusts can be
used to give some or all of your life insurance benefits to
other people.
RIGHT MONEY - Insurance Trusts can
allow you to choose who you would like to benefit from your
life insurance protection plans.
RIGHT TIME - Insurance Trusts can give
your family access to your family and mortgage life
insurance protection without delay.
Insurance
Trusts can allow your family to benefit from your family and
mortgage protection instead of the taxman.
Insurance
Trusts don't have to be difficult or expensive to set up,
with the use of an independent financial adviser.
Proceeds paid without delay
Where you have an asset that is not under trust, your personal representatives (the people you have asked to deal with your estate after you die) need to obtain a "Grant of Representation" before they can deal with that asset. This process is known as "probate" or "confirmation" in Scotland.
Probate is the legal process of confirming who is authorised to deal with the estate of a deceased person before the assets of the estate can be distributed according to the terms of their will.
Where someone dies without leaving a will they are said to have died "intestate". In such cases their estate will be divided according to a set of rules known as the "laws of intestacy". This can be a long process and can take several months. In the meantime, your family could be suffering financial hardship following your death.
The need for probate is avoided where your family and mortgage life insurance protection is under trust. Where a trust has been used, any potential long delays can be avoided, so long as there is at least one surviving trustee when you die. This is because your trustees are the legal owners of your plan, and can deal with the trust property immediately, making sure your chosen beneficiaries do not suffer financially after you die.
In fact, probably the most common reason for taking out life assurance is to provide for your family after you die. By adding the finishing touches and writing the plan in trust, you can make sure that the proceeds are paid without delay. ( see example >>> )
Trusts help with Taxation
Trusts can also be used for Inheritance Tax (IHT) planning reasons. IHT can be avoided using an appropriate trust.
Inheritance Tax is payable on estates over certain amounts. This means that estates which include the value of any mortgage and family life insurance protection have potentially greater chance of exceeding current limits, resulting in potential IHT liabilities.
The inclusion of a trust can provide opportunity for life insurance proceeds to be paid outside of your estate, thus not swelling your estate unnecessarily.
As well as avoiding unnecessary IHT, you can use a trust and life assurance plan to make sure your family has funds available to pay any liability that can’t be avoided. This will stop your loved ones having to take an expensive loan or even sell the family home to pay any owed tax after you die.