To create an absolute gift from the donor(s) to the trust beneficiaries.

To ensure the policy proceeds will not be liable to inheritance tax.

To ensure that if the benefits of the policy are paid on the donor’s (your) death, they are paid into the trust without the delay that would arise from the need to obtain a grant of probate/letters of administration on your estate. There will need to be at least one surviving trustee at the date of your death to avoid probate delay.

A discretionary trust enables the settlors to retain illness cover payable during their lifetimes and any personal benefits but give away their death benefits thereby ensuring that the value of the death benefits fall outside the settlors' estates for inheritance tax purposes.

This could secure an inheritance tax advantage for the settlors. Without the trust, the settlors' estates could be subject to inheritance tax charges (on the settlor's death in the case of a single policy or on the surviving settlor’s death in the case of a joint life second death policy) on the value of the life cover.

To avoid delay in the payment of benefits. Provided there is at least one living trustee when benefits are payable, payment will not need to be delayed pending issue of a grant of probate or letters of administration on the estate.

A discretionary trust is designed for use with joint life first death policies, including those which provide illness cover as well as life cover.

It also means that if one settlor survives the other by 30 days or more, the proceeds of the life cover would be held absolutely for the surviving settlor.

If both settlors die within 30 days of each other, the life cover benefit is paid into the trust. Without the trust, the proceeds of the life cover could be subject to inheritance tax as part of the estate of the last policyholder to die.

This type of trust provides the flexibility to allow the settlors to retain any illness cover they may have, for their own benefit.

To avoid delay in the payment of benefits if the settlors die within 30 days of one another. Provided there is at least one living trustee when benefits are payable, payment will not need to be delayed pending issue of a grant of probate/letters of administration on the estate.