Assurance Trust

If you do not write your life assurance policies in trust, they will form part of your estate, with proceeds not available until grant of probate

Some people are advised to write their policies in a trust, usually offered by the life assurance company (with no legal advice offered), which makes the proceeds available to a Beneficiary (usually the spouse), avoiding the need for grant of grobate. Funds can usually be paid out within a fortnight.

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Unfortunately, this overlooks the real planning opportunity that can be offered by a more comprehensive bespoke trust. 

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People assume that no additional planning is required, because funds are quickly paid to beneficiaries free of inheritance tax (IHT), but it is the inherited wealth that subsequently causes problems, in that it might;

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• Increase the IHT liability on second death

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• Miss the opportunity to reduce the IHT liability on second death

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• Not be available to Beneficiaries, on second death, until grant of probate (perhaps up to two years)

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• Not reach the second generation, if the surviving spouse remarries and pre-deceases the new spouse, or gets divorced with the pension wealth forming part of a settlement.

Prudent planning can avoid these potential problems and further reduce the tax liability on the death of the surviving spouse, allowing the wealth to flow down the generations in a controlled manner, as a part of your legacy.