30 November 2023

Margo Lestz

Head of Communications

Putting Life Insurance into Trust

Putting Life Insurance into Trust

Putting Life Insurance into Trust

Once you have taken the steps to set up your life insurance and protect your family, an important next step can be putting this policy into a trust. This might be beneficial for a number of reasons.

Once you have taken the steps to set up your life insurance and protect your family, an important next step can be putting this policy into a trust. This might be beneficial for a number of reasons.

Once you have taken the steps to set up your life insurance and protect your family, an important next step can be putting this policy into a trust. This might be beneficial for a number of reasons.

Putting Life Insurance into Trust
Putting Life Insurance into Trust
Putting Life Insurance into Trust

1. Avoid Probate

The proceeds of your policy won’t have to go through probate, so can be in the hands of your loved ones faster. When a person dies, probate must be granted before their assets can be released to their family, but because the trust is said to be ‘outside of the deceased’s estate’, this money doesn’t have to go through probate.

2. You Decide Who Receives the Proceeds

A trust can ensure that the person you wish to receive the policy proceeds receives them, and they are not misdirected to someone or somewhere else.

3. Pay Your Family First

If you don’t have a trust but have a high number of debts, upon death the proceeds of your life insurance will cover the costs of your debts before going to family, unless you have a trust in place.

4. Avoid Intestacy Rules

If you don’t have a trust or a will, the proceeds of your policy will be distributed according to intestacy rules, which may not be as you would have wished.

5. Reduce Inheritance Tax

For those with assets over £325,000, placing your life insurance policy into trust can be a useful way of reducing the amount of tax to pay upon death. The current Inheritance Tax rate is 40% on the excess of your assets over £325,000. However, if in trust, the proceeds of your life insurance policy are normally not considered part of your estate, and therefore not subject to Inheritance Tax.

Possible Disadvantage

It Is important to note that once the policy is placed into a trust, it can be harder to make changes to the policy terms, (depending on the type of trust). If you’re unsure whether a trust would be beneficial for you, you should consult an expert.

What exactly is a trust?

A trust is a separate legal entity that holds your policy and eventually, your policy proceeds.

Imagine it like a box.

The following people can have access to the box:

Settlor – The person who creates the trust. You can put your policy into the box and the box will stay closed.

Beneficiaries – When you set up the trust, you will assign beneficiaries, and these are the only people who are allowed to take the money out of the box, when the time is right.

Trustees – To make sure the trust is correctly maintained; you will assign trustees. Technically they own the trust- they can’t get into the box, but they can make sure that the beneficiaries can access the money at the right time. You should also be a trustee so you can keep an eye on the trust whilst you are alive, and you should consider who else you can trust to be a be a trustee; this might be a close family member or a professional such as a solicitor.

When you die, your life policy will pay out into the trust box, and the box can then be opened by the beneficiaries, and they can take the money out.

You can also set special terms with your trust. For example, you could allow your beneficiaries to access the trust only after they turn 18.

Utilising trusts is a clever way of changing your tax liability in many cases, and there are several types of trusts which have different rules and different features. Many things can be put into trust, such as investments or even houses. You should seek the help of an expert if you’d like to discuss this further.

How to Put a Life Insurance Policy into Trust

Most insurance providers have a simplified process for placing a policy into trust, which involves completing a form and sending it back to them. Sometimes, your circumstances might be a little more complex, in which case you’ll need a trust specialist. Thankfully, Genistar have a professional referral partner who can offer this service if you need it.

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The information provided on this website is for educational or informational purposes only. Please refer to our legal disclaimer for further information.


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Our mission is to help people secure a better financial future through financial education and the opportunity to own your own business. Our financial plan can set you on the road towards financial freedom.

About the authors

Our mission is to help people secure a better financial future through financial education and the opportunity to own your own business. Our financial plan can set you on the road towards financial freedom.

About the authors

Our mission is to help people secure a better financial future through financial education and the opportunity to own your own business. Our financial plan can set you on the road towards financial freedom.

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Genistar Ltd is authorised and regulated by the Financial Conduct Authority (472050)


VAT No. 326779856


Genistar Limited is incorporated in England and Wales, with registered

number 6315485. Its registered office is at Victoria House,
Harestone Valley Road, Caterham CR3 6HY.

The information provided on this website is for educational or informational purposes only. Please refer to our
legal disclaimer for further information.


Financial Services Compensation Scheme Protection

The FSCS is the UK’s compensation fund of last resort for customers of authorised Financial Services firms. With the standard Financial Services Compensation Scheme (FSCS) you are covered under the General Insurance Arranging claim category whereby the cover is 90% of the claim with no upper limits if we cannot meet our obligations.


Further information about compensation scheme arrangements is available from the FSCS.

© Genistar 2024 all right reserved.

genistar footer logo


Genistar Ltd is authorised and regulated by the Financial Conduct Authority (472050)


VAT No. 326779856


Genistar Limited is incorporated in England and Wales, with registered

number 6315485. Its registered office is at Victoria House,
Harestone Valley Road, Caterham CR3 6HY.

The information provided on this website is for educational or informational purposes only. Please refer to our
legal disclaimer for further information.


Financial Services Compensation Scheme Protection

The FSCS is the UK’s compensation fund of last resort for customers of authorised Financial Services firms. With the standard Financial Services Compensation Scheme (FSCS) you are covered under the General Insurance Arranging claim category whereby the cover is 90% of the claim with no upper limits if we cannot meet our obligations.


Further information about compensation scheme arrangements is available from the FSCS.

© Genistar 2024 all right reserved.

genistar footer logo


Genistar Ltd is authorised and regulated by the Financial Conduct Authority (472050)


VAT No. 326779856


Genistar Limited is incorporated in England and Wales, with registered

number 6315485. Its registered office is at Victoria House,
Harestone Valley Road, Caterham CR3 6HY.

The information provided on this website is for educational or informational purposes only. Please refer to our
legal disclaimer for further information.


Financial Services Compensation Scheme Protection

The FSCS is the UK’s compensation fund of last resort for customers of authorised Financial Services firms. With the standard Financial Services Compensation Scheme (FSCS) you are covered under the General Insurance Arranging claim category whereby the cover is 90% of the claim with no upper limits if we cannot meet our obligations.


Further information about compensation scheme arrangements is available from the FSCS.

© Genistar 2024 all right reserved.