Writing a life insurance policy in trust could be an advantage when considering the financial security of your family and loved ones. Many people arrange life insurance as a way of leaving their families with some money should they die.
A trust allows you to set aside assets for your family in which a trustee (s) takes care of them until they are needed or the responsibility can be passed on. There are many potential benefits to placing your life insurance in trust, including:
- By writing a life insurance policy in trust, the proceeds are sent straight to whoever you decide to be the beneficiary. this avoids having to wait for the usual production of probate or grant of representation.
- You are in control of your money. All decisions on how the proceeds are paid out and distributed are for you to make.
- You can be safe in the knowledge that it will go to the people that you want it to.
- They do not cost anything extra, and your insurer should be able to provide trust documentation when you take out your policy.
For existing life insurance policies not under trust the position can be rectified by assigning the policy (ies) to trustees who will then hold the policy on trust on behalf of the beneficiaries. Again many life insurance companies will have draft deeds of assignment which can be obtained on request. If you are unsure of your options you should seek financial advice.