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

For protection policies only. This information is for intermediaries only. It mustn't be distributed to, or relied on by, customers.

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 HM Revenue & Customs  (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.