Trusts

Making sure the right people benefit

If your clients have a CanProtect Whole of Life Plan or a Flexible Life Plan it is important to make sure that, in the event of them dying, the proceeds of the policy are paid to the right people in a tax-efficient way.

Without the use of a suitable trust, any amounts paid out under the plans will form part of their estate for inheritance tax purposes and the beneficiaries could lose up to 40% of the money to the taxman.

The use of a trust could mean that the proceeds are paid directly to the trustees or the beneficiaries, outside of your client’s estate without the need to wait for probate.

There are two types of trust:

  • A bare or absolute trust, where the beneficiaries are named at outset and cannot be changed. If the sum assured is paid out and the beneficiaries are over the age of 18 then the beneficiaries can demand payment.
  • A discretionary trust, as the name suggests, gives the trustees discretion, so if the sum assured is paid to them they can decide who benefits from the trust and when they benefit. As there is this level of flexibility the tax rules around a discretionary trust are different to those for an absolute or bare trust.

The value of investments can fall as well as rise and you should speak to a professional adviser to ensure that any investment is suitable for you.

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