What type of trust is your Flexible trust?
For protection policies only. This information is for intermediaries only. It mustn't be distributed to, or relied on by, customers.12 January 2020
Our Flexible trust(Opens new window) is a flexible power of appointment trust or interest in possession trust. This means the trustees have control over which of the beneficiaries benefit from the trust fund and to what extent. It’s also a split trust.
Split trusts effectively split out the different types of cover under the policy, allowing the settlor(s) to retain access to certain benefits and gift the rights to other benefits:
- Gifted benefits – the trustees will hold the terminal illness and/or death benefits for the beneficiaries, other than the settlor(s). The only exception to this is for married couples or registered civil partners who take out joint-life first death policies. Here, the surviving settlor will be able to benefit if they choose the survivorship option when they set up the trust. In this case, they'd also have to survive the first settlor by 30 days to benefit from the claims proceeds.
- Retained benefits – the trustees will hold any critical illness, income protection and/or total permanent disability benefits for the absolute benefit of the settlor. The settlor can choose for these to be treated as gifted benefits instead by initialling the relevant box on the trust deed when they set up the trust. If they choose to do this, they'll be giving up all rights of access to these benefits in the future.
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.