Do Not Get A Life Insurance Quote Until You Have Found Out How To Save Tens Of Thousands In Iht

As you have no doubt read on other life insurance advice websites

, a life insurance trust is something that may appear to be most appropriate for the over 50s life insurance market, however with many pluses, and practically no down side, placing a policy in a trust is something almost anyone should consider when getting a life insurance quote.

The main reason for this is that by placing your life insurance policy in to trust, you are placing the value of the cover outside of your estate meaning Inheritance Tax (IHT) does not apply.

Lets use an estate that is worth 500,000, 100,000 of which is life insurance that is not in a trust, as an example. The current Inheritance Tax threshold is 325k, and so 175,000 is subject to 40% Inheritance Tax, therefore 70k goes to the taxman. Converting a Life assurance policy into a trust reduces the estate to 400,000, leaving 75,000 over the threshold to be taxed and reducing the IHT sum to 30,000.

That leaves an incredible saving of 40,000 on tax, increasing by 40,000 the amount that the beneficiary receives. In addition a trust removes the need for solicitors to administer probate as a trust pays directly to the trustees promptly. Usually solicitors on average take six months to complete probate, which you will agree is a long time to wait before the beneficiary receives the money.

No doubt at this point you are waiting for the other shoe to drop; there is not one, it is as easy to set up a trust as your normal life insurance policy. When you are meeting an advisor to set up a policy, ask to place the policy into a trust, all the documentation is standard as the usual policy papers and requires no extra cost, as it will be finialised by the broker.

The only extra information required is the trustees details to establish the trust. If at a later date you need or must to change a beneficiary or trustee, all the broker will require of you is to complete both a deed of removal and a deed of appointment. With the deed of appointment you will need is the new trustees signature; the deed of removal only needs the settlors signature. Most agreements have a clause written in which enables you to change trustees, you need to check before signing any contracts that this clause is included.

It is advised is that you have at least two trustees nominated, though in most cases the settlor will be a trustee. The fellow trustee is usually a friend or family member, though it is strongly advised that you do not pick someone who could have a conflict of interest, i.e. a trustee who could also be a beneficiary.

If you are having problems finding a trustee, it is possible to hire a professional trustee, though they will charge a fee for their services, but an advantage of this route is they will be neutral.

It should be noted the beneficiary types can vary, i.e. people could receive different amounts, so it is important the wording must be crystal clear to avoid any legal disputes that might arise after the settlor has moved on. it is also for this reason an up to date will is also kept to avoid any confusion that might flame up with the maturing of a trust.

Therefore, setting up a trust ensures your beneficiaries receive the money with considerably decreased hassle with no major negatives, thus giving the settlor and family the peace of mind they desire.

by: Debi McGrady

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