09/01/2024
Protecting yourself and your family from financial difficulties can often feel tricky to navigate, with many things to consider.
Trusts are one key thing we should think about when financial planning. There are several different types of trust, but in more simple terms, a trust is similar to a treasure chest - a safe, locked box holding cherished belongings for the benefit of others.
Trusts are set up for numerous reasons: to have control and protection of family assets, to hold assets for children until they’re old enough to receive them, to pass on assets when you’re alive, for inheritance purposes upon death, or to handle someone else’s affairs due to incapacitation. [1] A trust represents more than just a legal entity; it embodies a powerful tool for protecting assets.
Trusts and Life Insurance
Writing life insurance in trust is a great way to safeguard your family’s future in the event of your death, with your policy being a significant asset. Once a trust is set up with your life insurance, your trustees legally own the policy, and must keep the trust deed safe (so they can make a claim to your insurer when you pass away).
Essentially, those who want to ensure their life insurance proceeds are distributed efficiently, securely, and according to their specific wishes should consider putting their policy in a trust.
What are the benefits of setting up a trust for life insurance?
Some of the benefits of putting your life insurance in a trust include:
- Faster access to money – there is no need to wait for probate which can cause lengthy delays (this is the legal process of valuing and allocating your assets and property upon your passing).
- One of the main benefits of doing this is that the value of your policy is generally not considered part of your estate. This means you can protect your beneficiaries from inheritance tax.
- You have more control over your assets. If you don’t have a trust, your money might be used to pay off outstanding debts. Putting life insurance in trust gives you greater discretion, and you can choose who to appoint as your beneficiaries and trustees.
Conclusion
Putting a life insurance policy in trust can streamline the process for your beneficiaries, ensuring a quicker pay-out without the delays associated with probate. This not only provides financial support to your loved ones promptly but can also shield the pay-out from inheritance tax, allowing your hard-earned assets to benefit those you care about most.
At Owl Financial, we can help you secure a bright financial future through tailored protection advice – your individual situation is a matter of great importance to us. Get in touch with us today, we’re here to help.
Trusts are not regulated by the Financial Conduct Authority.
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