Life Insurance trust fund?

[mrsmmajeika]

We have recently re written our wills now we have our DD. The solicitor mentioned thinking about putting our life insurance policies in a trust fund. Has anybody done this? What are the pros and cons? Thank you

You should write life insurance in trust so it doesn’t form part of your estate but rather goes to the people you want it to go to without the need for probate.

Putting the policy in trust gets the money into the right hands as quickly as possible as no probate. It also keeps it outside of your Estate for Inheritance tax purposes so beneficiaries get the full amount and it doesn't mess up your other planning. For some it also means there is money available to pay any IHT bills due so probate can be completed without forcing sale of property/assets. Lots of pros and very few cons.

It is a paper exercise with forms from your insurance provider and no costs to set up.

Thank you for the replies. We have had life insurance policies for many years but this has never been suggested to us before so we didn't have a clue about it! We will be getting this sorted in the next couple of weeks. Thanks again.

You should also put your property in Trust. That way you'd kids will not get whacked with inheritance tax. You should nominate trustees who will administer it, if necessary.

Houseplantmad

You should also put your property in Trust. That way you'd kids will not get whacked with inheritance tax. You should nominate trustees who will administer it, if necessary.

If there weren’t those pesky rules about gifts with strings. It’s not really that hat simple. Transferring property into a trust might well incur an immediate tax charge and the OP does not even tell us how much her property is worth either.

@Houseplantmad

You should also put your property in Trust. That way you'd kids will not get whacked with inheritance tax. You should nominate trustees who will administer it, if necessary.

That is terrible advice.

I’ve done this but only for one policy because my DC1 has a different dad so I wanted to ensure her share was protected

@Houseplantmad

You should also put your property in Trust. That way you'd kids will not get whacked with inheritance tax. You should nominate trustees who will administer it, if necessary.

🤦🏻‍♀️ this won't work, and you may find yourself at the business end of an immediate IHT charge.