Life Assurance Policy – What are the benefits of a trust? It is a very important question for all of those that have the foresight to take out a Life Assurance Policy to potentially reap the associated benefits. Laura Richardson tells us more . . .
A Life Assurance Policy pays out an agreed amount upon the death of the Policyholder. However, a Life Assurance pay-out is usually included in the total sum of your Estate after you die. Therefore the amount of Life Assurance paid out could affect the amount of Inheritance Tax that your Estate is liable for after you die. According to a recent survey by Sun Life, the average Life Assurance pay-out in the UK is just over £50,000. Deducting the current rate payable for Inheritance Tax of 40% from this amount leaves a pay-out of just £30,000 for your beneficiaries! However, if you include a Trust within your Life Assurance Policy, the full Life Assurance Policy pay-out would be paid out directly to your beneficiaries and not included in the total sum of your Estate.
Furthermore, the fact that the Life Assurance pay-out is made directly to your loved ones may also help alleviate some of the financial obligations that your loved ones may need to meet after your death, such as mortgage payments, funeral costs, or utility bills. It can take several months for even a simple Estate to be distributed between beneficiaries, due to the administrative legalities required and this period of time can be financially challenging to those that you leave behind. The pay-out from your Life Assurance Policy being accessible immediately could make a real difference to your loved ones during this difficult time.
Finally, including a Trust within your Life Assurance Policy means that you could choose to have more control over the pay-out. For example, if you would like your children to benefit from the Policy pay-out you can assign a trusted person (a “Trustee”) to manage the sum on behalf of your children after you die. This could include using the amount to benefit your children in an agreed way such as to fund further education for example, or could simply be set up so that the Trustee holds the amount until such time as your children reach a certain age.
If you would like further information regarding your Life Assurance Policy, contact Andrew Douglas Wills & Legal Services to arrange your free initial consultation. Including a Trust within your Life Assurance Policy need not be costly or complex. With Andrew Douglas Wills & Legal Services you can rest assured that you will receive expert advice and friendly service. What’s more, we are happy to visit you in the comfort of your own home! Whether in Colchester, or the surrounding areas of Essex, we look forward to your call.
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