What is your Bare Trust?
For protection policies only. This information is for intermediaries only. It mustn't be distributed to, or relied on by, customers.14 February 2020
A Bare Trust(Opens new window) can be used where the settlor would like to give all the benefits under a policy to named beneficiaries.
In the event of a valid claim, we'll pay the claims proceeds to the trustees, who are responsible for distributing these to the beneficiaries in line with the trust terms and powers. The settlor can't change their named beneficiaries or how much each is entitled to in the future.
A flexible trust may be a better option if the settlor's family circumstances could change in the future or if the settlor wants to retain access to some of the benefits under their policy.
Our Bare Trust isn’t a split trust.
The policy premiums may be covered by an inheritance tax (IHT) exemption, such as the £3,000 yearly exemption or normal expenditure out of income exemption. To the extent that they're not exempt, they will be potentially exempt transfers (PETs).
The trust fund value will form part of the beneficiaries' IHT estates. If one of the beneficiaries dies, their share of the trust fund will pass in accordance with the terms of their will or the intestacy rules.
To find out more about trusts, PETs and IHT, please visit gov.uk.
This information is based on our understanding of current taxation law and HMRC practice, which may change. Trusts establish legal rights and entitlements and might have material financial and tax implications for the settlor, trustees and beneficiaries. Aegon UK isn't authorised to provide legal advice, so you should take your own legal advice before setting up a trust, to make sure that it meets your clients' requirements. Our trusts have been drafted for use by UK domiciled individuals.