Prevent long delays – put policy in trust

News from the Lincs Free Press and Spalding Guardian, spaldingtoday.co.uk, @LincsFreePress on Twitter
News from the Lincs Free Press and Spalding Guardian, spaldingtoday.co.uk, @LincsFreePress on Twitter
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Life assurance is an important part of financial planning. Taking out a life assurance policy is the first step towards providing security for your dependants when you die.

You’ll want to make sure that your policy reaches your dependants quickly. The emotional trauma of a death in the family could be made worse by legal delays, tax or debts having to be paid out of the money you want your dependants to receive.

Placing your life assurance policy in trust is one way of helping make sure it is given to those you want it to go to, without delays.

A trust allows the policy proceeds to be given to the beneficiaries without giving them full control or access to the proceeds.

The settlor – the person giving away their life policy is called the settlor. The settlor chooses the trustees and the beneficiaries.

The people who receive payment from the trust fund are called the beneficiaries.

The trustees – the trustees take legal ownership of the trust fund from the settlor. They then look after the trust fund, and, following a claim will make arrangements for the payments to be made to the beneficiaries.

A discretionary trust offers most flexibility as the trustees can appoint from a wide range of beneficiaries, including your spouse and your children. The trustees have discretion about which of the beneficiaries will receive any benefits, how much they will receive and when they will receive it.

When an absolute trust is used the beneficiaries are chosen at outset and are absolutely entitled to the trust fund. The beneficiaries are fixed at outset and cannot be changed in the future.

It should also be remembered that whilst it is a good idea to put your policy in trust at outset, most insurance companies allow their protection plans to be placed in trust at anytime. If you think that this may be relevant to your situation then please get in touch.