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

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
  • Generally, there will be no value in the trust fund until the critical illness, terminal illness or death of the life assured