A trust is a legal arrangement that allows you to give away your assets at a later date, without necessarily losing control over them in the meantime. It's a term often used in the life insurance industry and can be incorporated into various policies.
A trust can allow you to plan effectively. You decide who'll receive the proceeds from your life insurance policy – you can specify exactly how and when the assets get passed on – and because you can arrange everything beforehand, it removes the need for probate. This can drastically speed up the process and means beneficiaries could have access to the trust's assets far quicker than if they were transferred in a will.
Placing your life insurance plan in a trust could also help protect the lump sum benefit of the policy from any inheritance tax – it may not be considered part of your taxable estate, and so could help generate even more benefit for beneficiaries. In addition, you remain in control of your assets and can precisely specify the terms of distribution, and you could even arrange a revocable trust so your assets remain accessible to you in your lifetime.
Trusts are highly complex, and they'll require the input of a professional before you can take things further. Make sure to seek suitable advice from your financial adviser to discuss the options and see if putting your life insurance policy in trust could work for you.
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Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.
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