If you already have adequate cover in place, it can be easy to assume that there is nothing more to be done. However, there are extra steps you can take to make sure that you and your loved ones are fully protected in the event of a claim.
Writing life insurance policies in trust
Having sufficient life insurance is a significant way of safeguarding your loved ones’ financial future. But you can go the extra mile by writing that policy in trust.
Putting your life cover in trust gives your trustees the authority to deal directly with the payout when you die. This means that funds can swiftly be made directly to the beneficiaries, without having to go through probate. Also, it won’t be considered as part of your estate so will not be subject to Inheritance Tax.
There are a few different trusts to choose from:
• Discretionary trusts – the trustees can use your letter of wishes to help decide which beneficiaries should be paid
• Absolute trusts, sometimes known as bare trusts – once you have decided on the beneficiaries, they cannot be changed in future by a trustee
• Flexible trusts – there will be a default beneficiary who will receive full payout, unless the trustees choose to appoint some funds to other discretionary beneficiaries
• Survivor’s discretionary trust – if you have taken out joint life insurance with a partner, they would be entitled to inherit the payout before your beneficiaries.
Putting your policy in trust does not have to be complicated. We can talk you through your options and help you choose the right trust for you and your beneficiaries.
Legal protection for joint homeownership
Marriage rates are declining and cohabitation is on the rise, which means that many couples are buying homes together without sufficient legal protection. In a recent survey, 46% of people who have bought a home with their partner said they did not pay equal amounts of the deposit1 and nearly 62% said their partner paid the entire deposit.
Despite this discrepancy in investment within couples, 53% said they have no legal documentation in place to protect themselves if their relationship ended.
Declaration of trust
A declaration of trust is a legal agreement between joint owners of a property. It clarifies each person’s share in the property, ownership rights, and states what would happen if the property was sold.
If you are buying a home with someone else, or a family member is contributing towards the deposit, it is strongly advised that you make a declaration of trust - it could be vital in preventing any future disagreements.
As with all insurance policies, conditions and exclusions will apply
Your home may be repossessed if you do not keep up repayments on your mortgage
1 We Buy Any Home, 2024
