Should I use a Trust?
What is a trust?
A trust is an arrangement where someone else manages your assets for the benefit of others. You might feel that those you want to give your assets to are unable to manage them by themselves. For example, they may too young. So any payment can be held until they are of a certain age.
With a life insurance policy, writing it in trust means there are benefits for those you want to leave your money to.
Life insurance and payouts
What happens to a payout from your life insurance depends on whether the policy was written in trust or not. If it was, the payout will go directly to those you want it to. If not, the payout becomes part of your estate to be dealt with along with the rest of your assets. This can have unfavourable outcomes for your loved ones. Writing your policy in trust can help them avoid these effects.
If your life insurance policy is not written in trust, when you die the payout goes into your estate, which is subject to inheritance tax. With a policy written in trust, the payout does not form part of your estate, so your loved ones can avoid this tax.
Easier life insurance payout
Writing your policy in trust means your loved ones can avoid delays getting the payout – when you die the money goes directly to those you want it to. If the policy isn’t written in trust, the payout goes into your estate, and payment can be delayed waiting for probate – this is authority for someone to deal with the estate.
Setting up a trust can be complicated, so we recommend using a solicitor to avoid any costly mistakes. A solicitor can explain how the trust will work and help you choose your trustees, who are often family members or close friends.
What is a will?
Compare trusts to wills to get an idea what’s right for you.
The Co-Op can help
We’ve teamed up with The Co-Operative Legal Services to provide a trust service and an easy-to-use will-writing service. They are leading will-writing specialists and offer legal advice without the jargon, with an honest and open approach to the law. Also, if you are thinking of putting your policy under trust, The Co-Operative Legal Services can advise you on your options.
To find out more about setting up a will or trust please call:
0330 606 9742