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Help Centre»»What is a Trust?

What is a Trust?

A Trust is a legal arrangement to manage and move your assets, such as your life insurance policy, to your chosen beneficiaries, via one or more trustees. 

There are different types of Trust, each with different nuances, but ultimately they all aim to do the same thing. Setting up a Trust is not required when taking out life insurance, however there are many benefits of doing this.

When writing your life insurance policy in Trust it no longer forms part of your Estate and therefore avoids Probate. By skipping the standard Probate Court Process of asset reallocation after your death, a potential life insurance payout will reach your chosen beneficiaries quickly. Probate can sometimes be lengthy or even be contested, neither of which you want when there are urgent costs your loved ones may need to pay, such as paying for a funeral or mortgage payments.

Putting your life insurance policy into Trust also provides you with greater flexibility with who will receive a potential payout and how they can spend it. For example, you could require a trustee to manage any money intended for a child until they reach the age of 18. If you do not put your policy into Trust, your payout will likely be given to your next of kin, whether or not you had intended for this to happen. 

If your life insurance policy no longer forms part of your Estate it is not taken into account when inheritance tax is calculated. This can ensure your loved ones receive all of the payout as intended, rather than losing some to the taxman. Please note that the rules of inheritance are subject to change and you should seek professional advice when it comes to taxes.

You can take advantage of Protect Line’s complimentary Trust Service when you purchase a life insurance policy through us.

Trust planning is not regulated by the Financial Conduct Authority. Inheritance tax planning is not regulated by the Financial Conduct Authority.

All help centre articles are designed to help give generic information to UK consumers. Protect Line operates on a non-advised basis, so no help centre article should be considered as advice or an indication of the terms and conditions of your policy. Insurers also update their terms and conditions from time to time and while Protect Line endeavours to keep all information up to date, there is a chance the information on these pages may become outdated. All information is correct at the time of publication. To ensure you fully understand the terms and conditions of your policy please read all your documents and contact us for clarification if there is something you do not understand.

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