Sheltering Life Assurance Payouts within a Trust

Most life assurance policies are written with the contract structured so that, in the event of death, the proceeds are paid to a named beneficiary. This structure, however, can lead to the following problems:

• The proceeds paid are added to the deceased estate, for inheritance tax purposes, before being distributed to the beneficiary. This could mean that they are liable to 40% Inheritance Tax,
• The proceeds will not be paid out until probate has been granted. This can often be delayed, resulting in the beneficiry not being granted access to this extra, and potentially much needed, source of funding.

Both of these problems can be avoided by writing the life assurance policy in trust. Most life companies have internally drafted standard forms to achieve this structure, which can be used without any additional charge.

We can assist you in this procedure, advising you on the practical and tax implications of setting up such a trust. In certain circumstances, you may wish to constitute a trust of this nature to provide income to one class of beneficiary and capital to another class.

Other Practical Examples of our Inheritance Tax Expertise

Including nil rate band dicretionary trust clauses in the Wills of both spouses, Holding assets upon death, and for at least the two previous years, which are entitled to the generous 100% Business Property Relief.

Making full use of the annual gift allowances. One of our partners acting as an executor in your Will.