life Insurance policy
Put you life insurance in Trust

 Is your life Insurance policy under trust?

People in the Uk are paying £448 m too much in IHT according to a report that was done by Unbiased. When you take out a life insurance policy you may not have been made aware of the best practice method of putting your policy under a trust.

What this means is that in the event of death the insurance would be paid out into the trust that would then be paid out to to one your beneficiaries instead of being paid  into your estate.

Every individual has a IHT allowance called the the nil rate band of £325000 or £650,000 if the spouses IHT full nil rate allowance has been passed on from death. If your life insurance pays into your estate then you may have to pay IHT tax of 40% on the lump sum!

The report from Unbiased highlights that 9 out of 10 people have not taken action to reduce their IHT bill. Tax planning is being neglected which can have huge financial consequences on certain individuals and families. They may not realise that their is an issue until it is too late.

In regards to Life insurance the policy should be put into trust for 2 main reasons.

1) To avoid any tax liability
2) To make the money available as soon as possible through avoiding having to go through probate

It is a very simple process and does not cost anything with us to set put a life insurance policy into Trust. Please review your policies to ensure that yours are set up in a tax efficient manner and consider this when taking out new policies.

If you have any questions then feel free to ask our Life Insurance Advisors who will help and offer a free review.

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