What are the tax implications if you place an existing policy in trust?

If the policy is being gifted to the trustees, then there shouldn’t be any income tax implications. However, inheritance tax may need to be paid as the policy is a gift from the owner to the trustees. This would either be a chargeable lifetime transfer or a potentially exempt transfer, depending on the type of trust that’s used.

How many trustees do you need?

There should always be at least two trustees – the person creating the trust can count as one of these. If a trustee dies, or no longer wants to be a trustee, then they can replaced.

Gift trust

Pass on your money in a tax-efficient way

This trust lets you gift your money outright in a tax-efficient way. When you place money in a gift trust, it moves out of your estate after seven years and is exempt from inheritance tax. Any investment growth is outside of your estate from day one. With our Gift Trust, you can also allow payments to be made to your beneficiaries while you’re alive.

Find all the documents you need for our Gift Trust. For investment bond and protection documents, including application forms and guides, visit the individual product homepages or the document library.

Key documents

Choosing an appropriate trust

Bare Gift Trust deed

Bare Gift Trust

Discretionary Gift Trust deed

Discretionary Gift Trust

Deed of Appointment/Retirement of trustees

Deed of Appointment and/or Retirement of trustees

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Briefing notes

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Frequently Asked Questions

If the policy is being gifted to the trustees, then there shouldn’t be any income tax implications.

However, inheritance tax may need to be paid as the policy is a gift from the owner to the trustees. This would either be a chargeable lifetime transfer or a potentially exempt transfer, depending on the type of trust that’s used.