This package not only allows you to order the Assignment document to assign the benefits of your client’s Life Assurance Policies to an existing Countrywide Assurance Trust, but allows you to produce a full Life Assurance Trust yourself, for your clients.
Why would my clients want their Life Assurance Policy benefits assigned to Trust?
The Right Time
Trust assets, such as an Assigned Life Assurance Policy are OUTSIDE of the estate of the Deceased, which means that they are paid out straight away, without having to wait for Probate which could take 6 Months or longer and so can be used by the Beneficiaries when they need them most.
The Trust also gives the option for critical illness or terminal illness to be paid either into the Trust and protected or paid to the owner of the Life Assurance Policy.
The Policy benefits are paid to the Trustees not the Deceased’s estate, so without the risk of a 40% deduction for Inheritance Tax.
The Right Money
Most people set up Life Assurance Policies to pay off their mortgage and other debts, to ensure their young children are provided for if the worst should happen, to protect businesses or partnerships or simply to leave something to their loved ones after they are gone.
They may have taken financial advice on the matter, but they certainly have given a lot of thought to exactly the RIGHT amount that should be in place (known as the sum assured), depending on what they want to achieve and it’s importance should not be overlooked.
The Right Hands
The policyholder has 2 choices.
1. Maintain the policy in their own name.
They maintain its ‘ownership’. If the policyholder maintains ownership of the policy, then on their death, the policy proceeds would be subject to the policy holders Will, or Intestacy Laws, if there is no Will. These policy proceeds are also part of the policy holder’s estate and will be accountable to their possible Inheritance Tax.
Critically, no beneficiary will be able to benefit from any of the deceased’s estate, including the life policy proceeds, until the legal administration of the estate is complete. The administration would include the payment of the deceased’s debts, including Inheritance Tax. Inevitably this administration process can be a timely (and expensive) exercise. The recipients of the proceeds will then be as directed by the deceased Will or Intestacy Laws. In some cases this could mean the wrong people receiving the funds for whom they were intended. This could include minor children.
Ultimately whoever inherits those assets, the proceeds will also be at risk from the following threats:
Marriage after death (future marriage for a surviving spouse or partner).
Divorce/separation settlements. Creditors & bankruptcy. Care costs.
Inheritance Tax and generational Inheritance Tax plus other potential claims against your beneficiaries.
To conclude, maintaining life policies in the policyholders name, can delay beneficiaries receipt of the funds, and leaves to chance, that the right people actually inherit. Once received by the beneficiaries, the funds will also be attackable from the range of external threats listed above.
2. Assign the Life Assurance Policy to a ‘Pilot Trust’ (A Discretionary Trust entitled ‘Life Assurance Trust’) whilst the policyholder is alive
‘Assigning’ the appropriate Life Assurance Policy/ policies to Discretionary ‘Pilot Trust(s)’ whilst the policyholder is alive, means that the policy (and subsequent proceeds) are legally ‘Trust’ assets and so not an asset of the Policyholder. As such the proceeds wouldn’t form part of the policyholder’s estate to be directed by their Will, and hence would not be delayed by the administration process. In addition, no beneficiary of the Trust has any legal right to the policy proceeds and so this has the benefit of not increasing their estates either. Furthermore the policy proceeds, appropriately managed by the Trustees of the Trust(s), will be protected from the range of threats already highlighted above.
So appropriately structured Life Policies and associated Life Assurance Trusts can provide your clients the peace of mind that their loved ones, who they want to benefit fully from these benefits, actually do so! This could be your spouse or partner, children or any other beneficiaries you may wish to benefit.
The reality is the RIGHT money, in the RIGHT hands, at the RIGHT time
If you are new to the industry or this is the first time you have heard about the use of full Discretionary Trusts and would like to learn more about how using Discretionary Trusts can help you with your client’s planning, Countrywide run regular training courses and webinars which cover this subject and much more.
If you are interested in attending a training day or a webinar then please contact us through this website.