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Trusts

What is a trust?

A trust is a legal document laying down exactly who you wish to leave your estate to. In this way it can be likened to a will, although they are not exactly alike. The Trust is set up during the lifetime of the life assured to define exactly who they wish the policy proceeds to be paid to in the event of a claim.

There are legal restrictions, but provided these are complied with the proceeds are paid free of liability to inheritance tax. They do not form part of the estate and are not therefore held up by probate processing etc. This means that your beneficiaries receive the payment almost immediately.

The Policy owner appoints Trusted friends, relatives or professionals as Trustees to the trust. The trustees are duty bound to ensure the proceeds are handled in compliance with the wishes of the deceased. In the event that the beneficiaries are children under 18 at the time of the claim the trustees would control the money on their behalf, until they are old enough to take control for themselves.

In addition the trustees have discretionary powers, provided they are all agreed, to make payments to persons not actually named as beneficiaries. This can only be done if they feel that the deceased would have chosen to do so.

For example, in the event of a recently born child with 2 elder siblings, they might decide to share the proceeds equally between all 3 despite the trust being set up originally as a 50/50 share between the elder children.

In order for this to be possible however the trust wording must be correct in the first place. We can advise you in this area.