If you live in Norfolk, England, and are considering purchasing life insurance, it’s important to consider putting your policy into a trust. A trust is a legal arrangement that allows you to set aside assets for the benefit of specific individuals or causes. When it comes to life insurance, putting your policy into a trust can offer a range of benefits, both for you and your beneficiaries. In this blog post, we’ll explore the reasons why you should consider putting your life insurance in trust.
- Avoiding inheritance tax
Inheritance tax is a tax on the value of your estate when you die. If the value of your estate, including your life insurance policy, exceeds the current threshold of £325,000 in England, your beneficiaries may have to pay inheritance tax on the amount that exceeds this threshold. By putting your life insurance policy into a trust, you can help reduce the value of your estate and potentially avoid or reduce inheritance tax.
- Providing for your loved ones
When you set up a trust, you can specify who the beneficiaries are and how and when they should receive the benefits of the trust. This means that you can ensure that your loved ones are taken care of in the way that you want after you’re gone. For example, you can set up a trust that pays out a regular income to your spouse or children or provides a lump sum payment for a specific purpose, such as paying for a child’s education.
- Avoiding probate
When you die, your assets, including your life insurance policy, will need to go through probate, which is the legal process of distributing your assets according to your will. This can be a lengthy and expensive process that can tie up your assets for months or even years. By putting your life insurance policy into a trust, you can avoid probate and ensure that your beneficiaries receive the benefits of your policy more quickly.
- Protecting your assets
When you put your life insurance policy into a trust, the policy is owned by the trust, not you. This means that the policy is protected from your creditors and cannot be used to pay off your debts or legal obligations. This can be especially important if you own a business or have other assets that could be at risk in the event of a lawsuit or bankruptcy.
Setting up a trust can provide you with a high degree of flexibility when it comes to how your assets are distributed after you die. For example, you can specify that the trust pays out a lump sum to your beneficiaries or that it provides a regular income. You can also specify conditions for the payout, such as minimum age or level of education, or stipulate that the trust pays out over a certain period of time.
In conclusion, there are many good reasons to consider putting your life insurance policy into a trust in Norfolk, England. By doing so, you can help reduce inheritance tax, provide for your loved ones in the way that you want, avoid probate, protect your assets, and enjoy a high degree of flexibility. If you’re considering setting up a trust, it’s important to consult with a professional advisor who can help you navigate the legal and financial aspects of the process.