Can our life insurance policies be ‘written in trust’?
My wife and I each have whole of life insurance policies. We would now like these to be ‘written in trust’.
I thought this was supposed to be simple but both insurers tell us we need a solicitor. Why? C.W
Mel Kenny, chartered financial planner with Radcliffe & Newlands replies: Writing life insurance policies in trust ensures a faster payout by avoiding probate.
The proceeds of a policy in trust are not counted as part of your estate for inheritance tax. Life insurers provide standard trust packs, but using the services of a solicitor can ensure your individual needs are met.
As you are transferring an existing policy, greater care must be taken as it will be treated as a gift for IHT purposes. The investment values of your policies and your health must be taken into account.
If your health has deteriorated, your policy could have a greater value attached to it. Where this exceeds the annual IHT gift allowance of £3,000 there are potential tax implications to consider.
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