Life Policies in Trust
There are two main benefits of putting a life policy in trust, but only a very small percentage of life insurance policies in the UK are set up this way.
Firstly, the provider will be able to pay a claim more quickly as they will just require a death certificate before paying out which means there is no wait for probate. If someone dies and their plan is not in trust, their representatives will have to obtain a grant of representation before they can deal with the policy.
Secondly, the policy may be free of inheritance tax (IHT) which is payable at 40% on any part of an estate valued over £325,000. The gifted benefits would no longer be a part of your estate and would not therefore be subject to inheritance tax. We recommend you get advice from an expert.
Employees pension and ‘death in service’ benefits
These benefits may also be written in trust for similar reasons to life insurance.
