Making the most of trusts
It’s the sort of thinking that gets you noticed

Trusts can help make sure that the money from your client’s plan ends up in the right hands at the right time quickly and tax efficiently.

There are 2 main benefits of putting your client's plan in trust:

Quicker payment of claims

If you put a plan in trust, we'll be able to pay a claim more quickly. If someone dies and their plan is not in trust, their representatives will have to obtain a Grant of Representation before they can deal with the plan. This can take several months. Putting a plan in trust can avoid this delay.

The plan proceeds may be free of inheritance tax

At the moment, inheritance tax is payable at 40% on any part of an estate valued over £325,000 (2011/2012). But you can use a trust to gift some or all of the benefits on the plan to other people. The gifted benefits would no longer be part of your client's estate if they die, which means those benefits would not be subject to inheritance tax.

There are 3 main roles involved in a trust:

The settlor

The settlor is the person who sets up the trust. They will appoint trustees to administer the trust and decide who the beneficiaries will be. They will also provide the property that will be held by the trust.

The trustees

The trustees will manage the trust fund for the beneficiaries. This includes making any claim under the protection plan and, if appropriate, investing any money paid out from that claim.

The beneficiaries

The beneficiaries will receive the trust fund in line with the settlor's wishes.