Summary

Not enough people realise that they need to get their life insurance policy "Written in Trust". This article explains why it is so beneficial.

Life Insurance - why your policy should be written in trust. Page 2

Author: Anna Richardson

If we do the exact same calculation again, this time assuming that Mr Smith's

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Life Insurance News

life insurance policy was written in trust, then it's quite a different story. The life insurance ( medical insurance ) company pays out £50,000 each to his sons, so that £100,000 policy cannot be included in Mr Smith's estate. Consequently, the estate is worth £300,000, so only £25,000 of that is subject to the 40% tax charge. As a result - the taxman only gets £10,000, and the sons get an extra £20,000 more, all for having the policy written in trust.

All Mr Smith had to do was sign a few forms, and £40,000 tax was saved!

There is no extra charge for having your policy written in trust, the documentation is standard and the life insurance company will easily process the forms for you. ( best mortgages ) You just need to provide details of your chosen beneficiary(ies), and sign the form - simple as that. A life insurance broker can also provide the forms, free of charge - there's no need for a solicitor. If a claim is made, the payout goes directly to those intended - the only loser is the taxman, and we find it very hard to feel sorry for him.

If your life insurance policy is designed to cover your mortgage in the event of a claim, you can also have that "Written in Trust". Then the money can be paid directly to your partner, who can use the money to pay off the mortgage personally rather than the money ( home insurance ) going through your estate and then paying off the mortgage. This avoids legal delays, solicitor's and probate fees, all of which are time consuming and very involving. Any saving you make on inheritance tax will depend on how much your estate is worth, and the structure of your will.

We can't see any drawbacks to getting a life insurance ( cheap mortgages ) policy written in trust, it really is a win-win situation and it's not often that we see those!

On a separate note, whether your life insurance is written in trust or not, you still need to make sure you have an up-to-date Will.