What’s the effect of holding a life protection policy in trust?

For protection policies only

Putting a life protection policy under trust will have the following effects:

  • no need for probate;
  • possible tax savings;
  • the trustees will legally own the policy;
  • the trust creates legal entitlements and can’t simply be set aside;
  • the policy (and the benefits it provides when paid) are referred to as the ‘trust fund’ and must be used by the trustees for the benefit of the beneficiaries; and
  • generally, there will be no value in the trust fund until the critical illness, terminal illness or death of the insured person.

Trusts establish legal rights and entitlements and might have material financial and tax implications for the Settlor, Trustees and Beneficiaries. Aegon UK is not 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 requirements. Our trusts have been drafted for use by UK domiciled individuals.