Should Joint Life Insurance Be Put in Trust?

We have recently taking out Joint Life Insurance off the back of our first mortgage. Should this be put in trust? I am a little confused.

Question asked by Keith Godwin

How Life Insurance Works and the Benefits of Putting It in Trust

A Life Insurance trust is effectively a wrapper which distributes the benefit paid out from life insurance policy on the event of your death or diagnosis of a terminal illness.

Writing your life insurance policy into trust ensures any benefit payment does not form part of your estate or count towards your inheritance tax allowance.

Joint Life Insurance policies covering spouses on a first event basis may see less benefit from being set up in trust from a tax perspective as there is a spouse/civil partner exemption for inheritance tax.

This exemption often removes the need for a trust as there is usually no inheritance tax liability when assets transfer from one spouse to another.

However, there are two scenarios where a trust may be needed:

  • You both die at the same time
  • You have a joint life insurance policy on a second life basis.

Should you put your Life Insurance into Trust?

As the first scenario cannot be predicted and writing your policy in trust does not cost you a penny, we would recommend writing your plan into trust to avoid any probate delays.

There are also discretionary trusts available that are designed specifically for Joint Life Insurance policies that can also pay out to the second partner on request, if they survive at least 30 days after the first death occurs.

Compare Top 10 UK Insurers

Takes approx. 60 seconds
  • £
Verified by Norton Symantec icon
 Or Call Us

Frequently Asked Questions

Contact Us

Head Office & Pensions and Investments
Senator House
85 Queen Victoria Street
Personal Insurance & Accounts Payable
Telecom House
125-135 Preston Road
Drewberry London Office MapDrewberry Brighton Office Map

If you are unhappy with our service, we have a complaints procedure, details of which are available upon request. If you are unhappy with how your complaint has been dealt with, you may be able to refer your complaint to the Financial Ombudsman Service (FOS). The FOS website is www.financial-ombudsman.org.uk.

Drewberry Ltd is registered in England and Wales. Companies House No. 06675912

Drewberry Ltd registered office: Telecom House, Preston Road, Brighton, England, BN1 6AF. Telephone 0208 432 7333

Drewberry Ltd (Financial Conduct Authority No. 505473) is an Appointed Representative of Quilter Wealth Limited and Quilter Mortgage Planning

Limited, which are authorised and regulated by the Financial Conduct Authority.

Drewberry™ uses cookies to offer you the best experience online. By continuing to use our website you agree to the use of cookies. If you would like to know more about cookies and how to manage them please view our privacycookie policy.