However, tax considerations can become increasingly important if the money is held in trust longer and you may want professional advice to help you. The person(s) who established the trust. They decide who benefits from the policy and who takes care of the money (the trustees). The grantor is responsible for paying premiums and is automatically a trustee. The settlor of the relevant life insurance plan trusts is referred to as the principal employer. You can also check out our more detailed trusted guides here for more information, or you`d like expert advice. If a policy is not held in trust, it may not be passed on to the people you wish to receive. The settlor (the person transferring their life insurance) is responsible for paying the insurance premiums. If the policy is terminated because payments expire, the trust also ends. If the policy had been placed in trust, they would have been outside the estate with clear instructions on who John wanted to receive the money, based on Lisa and John`s joint decision in advance to avoid future problems. Most life guidelines can be trusted, so anyone who has a policy can create one. If you`re not sure if your policy can be included in a relationship of trust, use the “Select” section of this trusted tool for advice or seek expert advice to understand all your options.
Their trustees must be over 18 years old, and this is usually easier if they are British taxpayers living in the UK. If you want trustees outside the UK, consider seeking specialist legal and tax advice in this regard. If you trust a personal protection policy, you can protect your client`s dependents from inheritance tax or avoid inheritance. It is important to understand that in some cases, the trust itself must pay taxes. However, in most cases, it is unlikely that there will be significant tax considerations before the life insurance is paid and also after a claim, provided the money is paid immediately from the trust. Creating a trust means that you (the trustee) pass on your policy to the trustees, who then legally own your policy and take care of it for the benefit of your beneficiaries. You are still responsible for paying insurance premiums, but trustees are responsible for the security of the escrow deed and all other documents. You claim your policy and make sure the money goes to your beneficiaries as intended. Deciding who will be a trustee is an important decision that you should consider carefully. Many people choose a family member or friend, while others appoint a professional trustee (such as a trust company), lawyer, or accountant.
You can choose a mix of both. You should choose at least two trustees, and they should be people you trust to act in the best interests of your beneficiaries. A flexible trust is similar to a discretionary trust, but it is more complicated. There are two types of beneficiaries. The first type of beneficiary is the standard beneficiary. These beneficiaries are individuals who are entitled to any income from the trust as soon as it arises. In practice, if life insurance is the trust`s only asset, there will generally be no income until the claim is made. The second type of beneficiary is the discretionary beneficiary. These discretionary beneficiaries are people to whom your trustees can give money at their discretion. They will only receive capital or income from the trust if the trustees appoint them during the term of the trust. If no appointment is arranged at the end of the escrow period, defaulting beneficiaries will receive all benefits.
The Trust Select tool can help you rethink your trust decisions in a few simple steps. You can then create your trusted certificate in minutes using the Complete section of our tool if you have any of the following types of legal and general guidance: Yes, to ensure that we can quickly and easily remit the proceeds of the policy to your trustees, remember to let us know of any changes to your personal details as soon as possible. Our records are therefore up to date. Our trusted service is free and easy to use. With a few simple steps, you can ensure that your life insurance money is held in trust so that it goes faster, faster and without lengthy legal proceedings to the people you want. Check out our Select or Finish sections of this tool for additional help building trust. Designed to be used with your customers, this tool helps you explain the benefits of a personal protection policy. It is also easy for you to establish a relationship of trust for your customer. Relying on protection policies is a great way to ensure that your customers` loved ones or businesses are protected.
Our guide explains why you should set up a trust for your client, the different trusts we offer, and how you can create one using our online trusts or paper forms. You can also give your trustees a letter telling them how you want to distribute the money, called a letter of wishes PDF: 44KB. There are also tax advantages when it comes to estate tax, as the value of your policy in the trust is generally not considered part of your estate when you die, leaving more to your beneficiaries. The main tax that is levied when insurance policies are held in trust is the inheritance tax (IHT). Estate tax is generally payable on all assets you own when you die, including payments from your home and life insurance. You can reduce your potential IHT bill by using a trust for your life insurance policy. Once a policy is held in trust, it is usually not part of your estate. This means that the money subject to inheritance tax upon your death may be less, increasing the amount of money your loved ones will receive after your death.