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AisaDirect Ltd, an Independent Financial Adviser authorised and regulated by the Financial Services Authority in the UK only.
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This website contains information which may or may not be applicableto your own situation and circumstances.
Any information or advice on this site does not constitute a personal recommendation. If you have any doubts as to whether a product or service is suitable for you, please seek independent advice.
WHY USE A TRUST
Essentially 3 reasons:
- Speed of access of funds after death
- Control of who those funds are paid to
- Ensuring that any cover does not inadvertently increase the value of your estate making liable to inheritance tax.
Furthermore a trust will provide additional assurance to family or business associates. Let us look at the alternatives for individuals (not partnerships or business where we would recommend use of cross-option type arrangements):
Life of another – no trust
Policies can be taken out on a 'life of another' basis. A wife could take out a policy on the life of her husband so that if he died, she would receive the money immediately as she owns the policy. There could be problems here if the person taking out the policy died before the person covered under the policy.
Own life policy – no trust
If you take out a life insurance policy on your own life and you die, then the proceeds of that policy are deemed part of your estate. If a policy is not placed under trust for the family, there could be delays in paying out the proceeds whilst waiting for probate to be granted.
In addition, there could also be Inheritance Tax to pay because the proceeds would form part of the deceased person's estate.
Policy in trust
These problems are easily overcome by writing policies and investments in trust. It is important that you take advice on the type and suitability of trusts in your particular circumstances as there can be significant tax liabilities if the trust is written incorrectly.