Why can’t the Business Protection trust be created with an existing policy?

For protection policies only

If the settlor were to assign an existing policy to the trustees to create the trust, there's a risk that capital gains tax could apply in the event of a claim.

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 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.