Life Assurance Policy

How trusts can efficiently manage your estate in a tax-efficient fashion.

No assessment of a life assurance policy would be complete without a discussion of trusts- trusteeship is a form of guardianship which defines who administers your assets. Trusts are also a tax-efficient means of administering your estate- and can smooth through the issue of probate.

So you’ve decided on what type of life assurance policy you want. You’ve established the right level of cover to protect your family interests. Now to make sure you keep control over the assets, whilst not making any tax sacrifices- it’s time to talk trusts!

Most life companies will offer trust management services free as part of the life assurance policy you sign. There are three people or groups involved in a trust: you (known as the settlor), the trustees (the people who administer the trust) and the beneficiaries. Actually, you don’t matter much- you won’t be there when the cash gets handed out; but the trustees are obligated to manage the trust effectively on behalf of the beneficiaries (and this might be the same people, i.e. your family)

A trust makes the trustees the legal owners of the asset- in this case your life assurance policy. This means that on your death, there is no need for a process of probate- the trustees already own the asset and are entitled to distribute its value accordingly- indeed this is why many people use a life assurance policy to cover other probate costs especially inheritance tax).