Putting Life Insurance in Trust: Free Guidance With Every Policy
Most people spend weeks choosing the right life insurance policy. Then they forget one simple step that could mean their family waits for probate to receive the money, or loses a chunk of it to inheritance tax. Putting your policy in trust takes minutes, costs nothing, and fixes both problems. We include it free with every policy we arrange.
Why put life insurance in trust? Three things it gets right
A trust does three things that a policy without a trust cannot. Without it, even a well-chosen policy can let your family down at the worst possible moment.
The Right Money
Inheritance tax protectionWithout a trust, your life insurance payout forms part of your estate. If your estate exceeds the inheritance tax threshold, up to 40% of the payout could go to HMRC rather than your family. A trust keeps the payout outside your estate entirely, so your family receives the full amount, not a reduced one.
The Right Person
Your money goes exactly where you intendWithout a trust, the payout goes into your estate and is distributed according to your Will, or the intestacy rules if you have no Will. A trust lets you name your beneficiaries directly. With a discretionary trust, your trustees can also respond to changed circumstances.
The Right Time
Days, not monthsWithout a trust, the payout is frozen until probate is granted. You will usually get probate within 12 weeks of submitting a complete application, though it can take longer. A policy in trust pays out directly to the trustees, bypassing probate entirely.
What can go wrong if life insurance is not in trust
These are not edge cases. They are common situations that catch families off guard.
Your mortgage lender will not pause repayments because you have died. Without a trust, the life insurance payout is locked in your estate until probate is granted. A process that can take 12 weeks or longer. Your family may face serious financial pressure during that period, even though the money exists and is owed to them.
If your estate, including your home, savings, and the life insurance payout, exceeds the inheritance tax threshold, the payout becomes taxable. A £300,000 policy could lose £120,000 to inheritance tax if it sits inside your estate. A trust removes the payout from your estate before that calculation is made.
Life changes. A beneficiary named in your Will might later divorce, face bankruptcy, or have other circumstances that affect whether the money reaches them. A discretionary trust gives your trustees the flexibility to respond to those changes.
What is a life insurance trust? A plain English guide
A trust is a legal arrangement. When you write your life insurance policy in trust, you transfer ownership of the policy to a small group of trusted people, called trustees. You name the people you want to benefit, called beneficiaries. If you die, the trustees receive the payout directly and distribute it to the beneficiaries according to your wishes.
The policy no longer belongs to your estate. It belongs to the trust. That is why it bypasses probate and sits outside your estate for inheritance tax purposes.
We Include This Free, For Every Client
Trust guidance is not an add-on or an afterthought. We walk through it with every client we work with, as standard. There is no extra charge, no separate appointment, and no complicated paperwork to navigate alone.
How to put your life insurance in trust with us
We make the trust process straightforward. Here is what to expect.
We arrange your policy
Once your life insurance or protection policy is confirmed, we talk you through the trust options that are right for your situation.
You choose your trustees and beneficiaries
We explain the difference between trust types and help you decide who should be your trustees and who should benefit.
The trust form is completed
Most insurers provide their own trust form. We guide you through it. It is straightforward and takes minutes to complete.
Your policy is in trust
The policy is now held in trust. If you die, the trustees receive the payout directly, usually no probate, no delay and usually no inheritance tax on the payout.
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Life insurance trust questions answered
Does putting my policy in trust cost anything?
Does a trust affect my premiums?
Can I change the trust after it is set up?
What happens to the payout without a trust?
Who should I choose as trustees?
How do I check broadband speed at a property?
Does a trust replace a Will?
Is trust guidance regulated?
Protection insurance you can put in trust
More on trusts and getting the money paid
Talk it through with us
Tell us what you have in mind and we will come back to you, usually the same day. We are open Monday to Saturday, 9am to 8pm.