A Guide to Life Insurance Trusts | Zurich Insurance

Putting your life insurance into trust

When you put your life insurance in trust, you choose who receives the pay out. And when the time comes, they'll usually receive it quickly and in a tax-efficient way.

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Basic facts of trusts

  • A trust is a legal arrangement allowing a person to transfer money or assets (such as property, life insurance, investments or other possessions) out of their estate and ‘gift’ them to someone else (the beneficiary). 

  • We’ll assume the asset being placed in trust is a life insurance plan. 

  • This is done by creating a 'trust deed', which details who is involved in the trust (the parties to the trust) and the terms of the trust (the trust provisions). 

  • Normally, placing a plan in trust is an 'irrevocable act', which means once the plan is in trust this decision can't be changed later on, so you need to really think if putting your plan in trust is right for you. You can put a life insurance plan into trust as soon as it starts, or at a later date.

Advantages

  • Proceeds are paid to the right person/people.

  • Proceeds are paid out quickly, so long as there's at least one surviving trustee - we won't need to wait for probate.

  • Helps reduce Inheritance Tax liability - as proceeds fall outside your estate on death*.

* We’ve based this information on our understanding of current UK law and HM Revenue and Customs practice at May 2016. Bear in mind, any changes to these rules, or to your personal circumstances could affect what you get in the future.

Disadvantages

red X Once your plan has been put into trust, you can't change your mind and take the plan out of trust later on.

red X You're giving up ownership and sole control of your plan, although you would be one of the trustees, so during your lifetime you would have some control.


Which trust is right for me?

We provide a range of trusts to cover different needs, so it's important you understand which trust is right for you.

Our tool can help you decide by asking you some basic questions to help narrow down the options of which trust might be best for you.


Being a trustee - Your guide

The role of ‘trustee’ is very important and to help you understand your duties and responsibilities, you and your chosen trustees should each read this guide before agreeing to be a trustee.
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Step by step guide to putting your life insurance plan in trust

Once you’ve chosen your trust you can complete and submit your trust deed to us before your plan is set up, or alternatively follow the steps below:

  1. Set up your new life insurance plan.
  2. Receive your plan documentation from us.
  3. Consider your choice of trust.
  4. Print out your chosen trust deed.
  5. If you are not totally sure you can get further information and help by calling us on 0345 266 1046 – as when you sign the trust deed it becomes a binding legal document which cannot be undone. If you are still not sure, you should seek professional advice from a solicitor or your financial adviser – you may have to pay for the advice you receive.
  6. Complete all parts and your signature must be witnessed. Your other trustees must also sign to accept their appointment.
  7. Post your completed trust deed back to us:

Zurich Assurance Ltd
Tricentre One
New Bridge Square
Swindon
SN1 1HN


Need help?

Completing the trust deed

For help to complete a trust deed, please call 0345 266 1046, or email zurich.customer.service@uk.zurich.com

However, we won’t be able to advise you which trust suits your personal circumstances, but we will be able to answer factual questions about the trusts themselves.

Looking for advice?

If you are unsure if putting your plan into trust is right for you, or you’re not sure which trust to choose, you should seek professional help from a solicitor or your financial adviser – you may have to pay for the advice you receive.

Got a question?

Take a look at some of the most frequently asked questions about putting a life insurance plan into trust.