A deep dive into trust forms

When you take out a life insurance policy, you’ll probably have heard about trust forms when dealing with life insurance.

These sheets of paper are just as important as your life insurance policy itself, so looking into trust forms and knowing the ins and outs is crucial.

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What exactly is a trust form?

In the simplest terms, a trust form is the key to delegating who gets the money from your life insurance policy, if the worst were to happen to you.

If you have a few people in mind you’d like to receive the cash; some insurers allow you to break down the percentages each of your loved ones will get. This means you can spread out the payout from your policy among different beneficiaries.

Why do we need trust forms?

Trust forms aren't exactly mandatory when dealing with life insurance. Think of them as a very important cherry on top.

If you don’t complete your trust forms, there's a risk your insurance payout might not end up with your loved ones. And by filling out your trust forms, you can sidestep some pesky legal hassles like probate and even soften the blow of inheritance taxes.

But let's move past the legal talk. It’s the peace of mind. Once you've dotted the i's and crossed the t's on your life insurance and trust forms, you can relax, knowing that should anything happen, your family has the financial cushion of your life insurance policy.

What is inheritance tax?

People often decide to turn a blind eye when tax is talked about but there are some bits you should pay attention to, especially if you have a life insurance policy or if you’re thinking of getting one!

Inheritance tax is a type of tax that is payable by a person who inherits money, property, assets or possessions from a person who has passed away.

For Inheritance Tax, there's a tax-free limit called the nil rate band. In 2023/24, this limit is £325,000. Anything above this is taxed at 40%.

When you pass away, your life insurance policy may be subject to inheritance tax if it forms part of your estate. But one way to mitigate inheritance tax is by placing your policy into trust.

What is an estate and is your life insurance part of it?

Everything owned by a person when they die is their estate. Whether this is your land, property, money or possessions - it will all generally go into your estate when you pass away.

The one way to ensure the pay-out from your life insurance policy doesn’t go into your estate is if you put your policy into trust.

Filling out your trust forms

Trust forms, for the most part, aren’t tricky.

They typically follow a similar pattern. But, at first glance, the technical jargon can be a bit much. That’s why our trust team is ready to take you through the process.

Are you worried about a ticking clock? Don't be. There’s no time limit on completing your trust forms. Our trust specialists are here, ready to break things down, answer any questions, and ensure you’re all set with your documents.

Our trust team’s extended support

Our customer care doesn’t end once you’re done with your trust forms - we’re here to stay.

We'll ensure your trust forms reach your insurance provider with our free pre-paid envelopes. If any tweaks are needed, we can cover the cost of mailing your documents back and forth, ensuring everything's perfect - and it won’t cost you a dime.

When everything's in order, and you’re happy, we'll send over a copy of your trust forms for your records.

After you're all settled with your policy, if there’s ever a hiccup or a question down the road related to your policy, our aftercare continues.