Safeguarding Your World: Trusts, Wills, and LPAs

“Whenever you’re setting up a life plan that’s in a sole name, then it makes absolute sense to make sure that’s in trust…to ensure that the payment doesn’t get delayed in probate which currently is taking a ridiculous amount of time to get through.”

“Trusts are not always the solution… it’s not all rainbows and unicorns when we’re talking about trusts.”

“When you’re dealing with somebody who’s a sole life, it’s essential that we have that conversation [about trusts].”

“It’s important as advisers that we revisit those policies that we’ve got in trust…living documents that we have to keep on top of.”

“Many of the complaints that [insurers] see around trusts are that people don’t understand that when they put a policy into trust, they’re actually giving the policy away. The trustees become the people in charge of that policy… That’s an issue that we as advisers have to address with our clients… trustees are very important in the whole process, and to think carefully about who they are.”

“Reviewing that trust becomes an important part of the process… are the beneficiaries still the beneficiaries that you want to receive the money? Are the trustees still the people you want looking after the money?”

“I always make the point of asking if the client’s got a will…and off the back of that ask about lasting powers of attorney.”

“When we start our protection [discussions], they’re already thinking about that type of planning.”

“Key advantages of using the trust: the payout is made to the right people… it avoids probate delays which are up to 11 months long…and it also protects you by closing that circle of your advice.”

“Without a trust or will in place, the payout will be discretion in line with the laws of intestacy, which could be very different to what the customer had in mind.”

“We recommend that ‘payout planner’ is used for people with very simple affairs…if it’s for IHT planning, a trust will allow that.”

“The last industry report showed that only 17% of life cover was written in trust across the whole industry.”

“[Ensuring] payout is made to the right people, i.e., those the client wants to benefit…this should be a simple matter of letting the insurer know who that person is.”

“If you don’t put a plan in trust, and there’s an 11-month delay, can you afford to wait 11 months until the proceeds of this life plan are made available? Most families are going to say no.”

“One of the best ways of ensuring that this happens is to put a vehicle in place such as a trust…’

“With ‘Payout Planner’, if a client dies during the application process, the plan proceeds will be paid out via your nomination…before the plan even goes in force.”

“There is a big trust gap… the most recent figure suggests between 16 and 20% of single-life policies were written in trust in 2022.”

“If a life policy isn’t assigned into trust, the chances of the benefits being paid at claim going into the estate are very common.”

“Contractual Beneficial Nomination gives clients the ability to name people that they want to receive any benefits paid on death…but doesn’t require any trustees or complex trust deeds.”

“There’s still a lot of legal jargon within trust documentation. As an industry, we’re seeing improvements to make the process easier and more straightforward.”

“Clients often struggle to think of suitable trustees… thinking of individuals that are suitable to carry out such an important role can be a challenge.”

“Trusts provide an additional element of protection for customers that may be young or unable to manage assets themselves.”

“For clients with cohabiting partners, the risks are higher because they aren’t recognised under the rules of intestacy. They could lose 100% of the policy proceeds if there isn’t a trust in place.”

“Contractual Beneficial Nomination is governed by contract law, while trusts are governed by trust law. Both give control over who benefits, but they differ in flexibility and complexity.”