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Trust Documents

Placing your life insurance into a trust ensures that the payout goes exactly to the people who you intend.

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Writing your life insurance policy into a trust can help to provide more for your loved ones. It provides greater flexibility over who you would like the money to go to and how much. A trust document for life insurance is straightforward to set up and comes with many benefits for the policyholder and their family.

At Stonebridge Rock, we provide a free service to help all our customers with their trust documents.

What is a trust?

A trust is a document that allows you to decide who you would like your life insurance policy to go to and who you would like to execute this. Trust documents also outline how much you would like each beneficiary to receive.

Who can be a beneficiary?

A beneficiary can be anyone you wish to receive the payout from your life insurance policy. This can be a partner, a parent or your children. A beneficiary could also be a charity you wish to leave money to or anyone you wish to receive some money in the event of your death.

Choose your trustee

When setting up your trust document you will appoint a trustee who will manage the payout on your behalf. A trustee is responsible for ensuring that the money of your life insurance claim goes to your chosen beneficiaries. A trustee can be a business, partner or anyone you trust to distribute the funds as you intended.


Benefits of trust documents

A trust allows you to have more control over who receives your life insurance policy. You can choose specifically who you wish to receive a payout and how much each beneficiary will get.

When your life insurance policy is written into a trust, it also protects it from inheritance tax. If your estate is over £325,000 your family are currently liable to pay 40% inheritance tax on anything over that amount. A life insurance policy could take a lot of people over that threshold.

When your policy is in a trust, it does not count towards your estate, therefore, no inheritance tax needs to be paid on it.

Avoid the probate process

When you write your policy into a trust, you can avoid going through probate. Probate is the process that grants the person written into your will the legal right to distribute your money. If there is no will in place the estate will be shared out according to the rules of intestacy. Typically, it will fall to a married partner or civil partner and/or any children or grandchildren.

Either way, this process takes a long time to sort and a lot longer when there is no will in place. What’s more, unmarried partners or partners not in a civil partnership are not entitled to inherit anything.

When the policy is written into a trust, the money can be distributed as soon as the claim is processed and your chosen beneficiaries, which can include unmarried partners, can get access to the money.

Trusts and Inheritance Tax Planning are not regulated by the Financial Conduct Authority.

Frequently Asked Questions

Does it cost extra to set up a trust?

If you go via a solicitor to write your insurance policy into a trust, you’ll be looking at paying a fee. Luckily, with Stonebridge Rock, our trust service comes at no extra cost to you. We’ll set your policy up with your trust documents and your chosen beneficiaries when we apply for the policy. All you need to do is choose your trustee and beneficiaries and let us know.

Is there any paperwork involved?

Trusts normally involve a document which needs to be signed by yourself and your chosen trustee. However, life insurance providers are beginning to introduce online trust platforms that streamlined the whole process. Currently, Aviva, Royal London and Legal and General all operate an online trust platform.

What is a discretionary trust?

A discretionary trust is a flexible type of life insurance trust. Your appointed trustee takes the responsibility of distributing your life insurance to your suggested beneficiaries. They can also control when they receive the money. For example, when you leave money for your child but want them to receive it at the age of 21.

Your recommendations on who you receive the money is called an ‘Expression of Wishes’. Although it is not a legally binding document, it helps your trustee to choose who you intended the policy to go to. The major advantage of a discretionary trust is that beneficiaries can be added or taken away at any time. Therefore, if you have more children or grandchildren, you can add them to your policy if you wish.

What is a non-discretionary trust?

A non-discretionary trust is a simpler trust document. You nominate a trustee or trustees and choose your beneficiaries. There is no flexibility in this, and your trustee is legally bound by who you choose. A non-discretionary trust cannot be changed further down the line.

Do I have to place my life insurance in a trust?

You don’t need to place your life insurance in a trust, but it can protect you and your family from inheritance tax. It also speeds up the process of getting the money to your family, so they can be financially supported during a difficult time of adjustment.

Can I remove the trust later on?

You cannot usually remove a trust once it has been set up. If you wish to set up your life insurance policy without a trust, you would need to get a whole new policy and cancel the current one.

I need help completing the trust deed

If you need any help with your life insurance trust, we’re available to advise you on how to fill it out. If you need help completing the trust deed, contact us today on 01329 448 251.