personal protection insurance
Protecting Your Legacy :
Life Insurance and Trusts
Explained by Bright Life
Life Insurance & Trusts by Bright Life Protection
Life insurance offers financial security for your loved ones after you’re gone. But how can you maximise its benefits and ensure the payout is used as you intend? Trusts offer a powerful tool to achieve these goals.
A trust is a legal arrangement where you transfer ownership of assets (like a life insurance policy) to a trustee. This trustee, who can be an individual or a company, manages the assets according to your wishes outlined in a trust deed.
What is a Trust?
Benefits
Benefits of Using a Trust with Life Insurance
Consider these five important advantages of a Trust provided by Bright Life …
Reduced Inheritance Tax
When a life insurance policy is held in a trust, it may not be considered part of your estate, potentially reducing your inheritance tax liability and saving your beneficiaries a significant sum.
Protection from Creditors
Assets held within a trust may be shielded from creditors attempting to make claims against your estate
Maintaining Control (With Options)
While you transfer ownership to the trustee, you can still maintain a degree of control. Depending on the type of trust, you can outline specific conditions for distribution or even reserve the right to change beneficiaries in certain situations.
Flexibility in Distribution
Unlike naming beneficiaries directly on your policy, a trust allows you to specify how the payout is used. This is particularly helpful for young beneficiaries, ensuring they receive the money in stages or have it used for specific purposes like education.
Faster Access for Beneficiaries
Probate, the legal process to distribute your estate, can delay access to funds. Trusts can bypass this process, allowing your beneficiaries to receive the life insurance payout quicker.
about trusts
Types of Life Insurance Trusts
Several types of trusts can be used with life insurance, each catering to different needs:
Life Insurance Trusts
Designed specifically for this purpose, they offer the most direct benefits mentioned above.
Discretionary Trusts
Grant the trustee greater flexibility in how they distribute the payout among beneficiaries named in the trust.
Bare Trusts
Offer a simpler structure for transferring ownership of a life insurance policy to someone else (like a child) when they reach a specific age.
Important Considerations
Cost
Setting up and maintaining a trust might incur fees.
Complexity
Trusts can involve legal documents and structures. Consulting a solicitor is always recommended to ensure it's set up correctly and aligns with your specific goals.
Loss of Direct Control
Once ownership is transferred, you may have limited ability to make changes to the trust without legal intervention.
Bright Life Protection will assess your circumstances and advise of the important considerations of any life insurance and trust plan
your life insurance partner
Bright Life : Your Partner in Life Insurance and Trust Planning
Our team at Bright Life is here to help you navigate the world of life insurance and trusts. We can assist you in:
Comparing life insurance policies from the UK's leading providers to find the best fit for your needs
Understanding the different types of trusts and determining the one that aligns with your goals
Connecting you with legal professionals who can guide you through the trust creation process
By combining the strengths of life insurance and trusts, you can ensure your loved ones are financially secure and receive your legacy exactly as you envision.
Ready to discuss your options?
Contact Bright Life today and let us help you build a brighter future for your family.