When you die you will likely leave behind assets; property, money in the bank, investments, vehicles and other personal possessions. The collective name for this is your Legal Estate. If the value of your Estate is above the UK government threshold, the Estate may be liable for inheritance tax (IHT).
Without a Trust, a life insurance policy will pay out to the deceased person’s bank account, or the deceased person’s personal representative (usually the Executor of the Will), and therefore the money would form part of the Estate. In some cases, this could put the Estate above the inheritance tax threshold.
If you put your life insurance policy into Trust the value of your life insurance policy is generally not considered part of your estate. This means it wouldn’t be part of the probate process, so it could pay out to your loved ones faster (which means no waiting for the money). It could also avoid any inheritance tax because your life insurance cover wouldn’t be part of your Estate if it’s in Trust.
Putting your policy into Trust could potentially save your loved ones thousands of pounds by them not having to pay inheritance tax on the policy’s value. A policy in Trust will also likely payout faster, due to avoiding Probate, and therefore make a real difference to your loved ones as they may urgently require the money to pay for funeral expenses, pay outstanding utility bills, pay school fees, sort out any credit card debt, and replace regular income.
Protect Line offers a free Trust service with every policy we sell. Our specialists will talk you through the process, discuss your list of beneficiaries and help you fill out the relevant Trust forms. Please be aware that Protect Line does not offer financial or legal advice, pensions guidance, nor does it offer support with inheritance tax forms. The tax-free allowance for inheritance tax can change at anytime, so can laws, so please seek professional advice for further financial security.
Trust planning is not regulated by the Financial Conduct Authority. Inheritance tax planning is not regulated by the Financial Conduct Authority.