Probate trust

A trust is a way of managing assets (such as money or investments). It’s a legal arrangement where someone (the settlor) puts assets into a trust and appoints a person or group of people (the trustees) to look after them, for the benefit of a group of people (the beneficiaries). There are various types of trusts, with different features and benefits.

Our Probate Trust

With this trust, there’s no need for the trustees to wait for probate. This means that the death benefit can be paid quicker when you die.

To set up this trust, you’ll need to take out one of our investment bonds first and then transfer it into the trust. If the bond is in joint names, then the trust must also be set up in joint names.

Once the trust is set up, the trustees have flexible access to the funds and can make payments from the bond as and when needed. This means that this trust won’t help you reduce any potential inheritance tax.

The trust will continue until the investment is given to the beneficiaries.

Accessing your money

With our Probate Trust, you can access your investment as and when you need.

A Bare Probate Trust

With a bare Probate Trust, you are the only beneficiary. The donor (person setting up the trust) is not automatically made a trustee.

A Discretionary Probate Trust

With this option, the trustees manage the trust at their discretion. This means they can make decisions such as who’ll benefit from the trust, how much money they’ll get and when. You are one of the potential beneficiaries. There may be inheritance tax implications when you create this type of probate trust and you should speak to your financial adviser before proceeding.

Products that can be used with this trust

We offer a number of different investment bonds that can be used with our Probate Trust. Click on the links below to explore each product.

Premiere accounts

Delta Account

Offshore Savings Account

Prestige Account

What are the tax implications?

Income tax might need to be paid on any money withdrawn from an investment bond in our Probate Trust. The person who needs to pay the income tax will change, depending on whether the trust is set up as a bare or discretionary trust. If you need more information on tax, please speak to your adviser.

On your death, the investment will be included in your estate and therefore is in scope for inheritance tax.

How many trustees are needed?

You’ll need to make sure that the trust always has a minimum of two personal trustees or one corporate trustee.

 Can I remove a trustee?

You can’t remove a trustee. However, if a trustee dies, wants to be discharged, refuses to act, or is no longer capable of being a trustee, you can appoint a new trustee in their place.

 Can I appoint more trustees?

Yes, as long as you have no more than four trustees at any one time.

Can I change the beneficiary?

This depends on the type of trust you use.  If you use a bare version of this trust, you won’t be able to change the beneficiary. This is because you’re the sole beneficiary of the trust. If you choose a discretionary version of this trust, the trustees will decide who benefits after your death, how much they get and when.

 Can the donor or settlor access the money held in our Probate Trust?

With a bare Probate Trust, the donor is the sole beneficiary. Under a discretionary Probate Trust, the settlor is included as a potential beneficiary. This means that the trustees can make payments to the donor or settlor at any time.

 Can this trust be used for inheritance tax planning?

As the donor or settlor is a beneficiary under the trust, you cannot reduce any potential inheritance tax through using a Probate Trust.

Deeds Bare Probate Trust deed Bare Probate Trust Deed – Donor not Trustee Discretionary Probate Trust deed Deed of Appointment/Retirement of trustees Nomination of beneficiary

Guides Probate Trust briefing note

Looking for any other form or document?

View all documents

Professional Trustee Service
We’ve partnered with ZEDRA, a leading trustee service provider, to offer a Professional Trustee Service for our customers. If you intend to use this service, please see our dedicated  Professional Trustee Service webpage  for more information, and Zedra specific deeds. Please do not use our standard trust deeds for the Professional Trustee Service

1. Kevin’s story - Fast access to funds to help pay funeral costs

About Kevin                 

Kevin is 55 years old and in good health. He’s divorced, with four children and three grandchildren. Kevin owns a range of investments including shares, investment property and collectives. He also has an investment bond, which he sometimes takes withdrawals from. His total estate is valued at £3m.

Worries over Inheritance tax

Kevin knows that his family could end up paying a large inheritance tax bill when he dies, as some of his assets might be difficult to sell straight away.

He knows that his family will need to pay any inheritance tax before they get probate. Getting probate could take up to 18 months and Kevin’s worried that his family won’t have the funds to give him the funeral he wants.

 A discretionary Probate Trust

After talking to his adviser, Kevin chooses a discretionary Probate Trust. Kevin assigns his investment bond into the trust. He is automatically a trustee and appoints his two children as additional trustees.

This trust will allow his children to get cash quickly when he dies – without having to incur the costs and delays that can happen with getting a Grant of Probate. Kevin also likes the fact that as he is a beneficiary, the trustees can make withdrawals for him.

Inheritance tax

Although this is a transfer of value for inheritance tax purposes, no tax will be payable as Kevin has not used any of his lifetime gifting allowance of £325,000. As Kevin is a potential beneficiary, the whole value of the trust fund will be included in his estate and in scope for inheritance tax.

Investment fund paid immediately

When Kevin dies, the trustees are able to give the funds to the beneficiaries immediately. His children can use some of this money to organise and pay for their dad’s funeral whilst waiting for probate on the rest of his estate.

They haven’t had to use their own money while waiting for the Grant of Probate to be administered.

 What are the risks?

The value of your investment can go down as well as up and you may get back less than you invest. The way investments performed in the past is not a guide to how they’ll perform in the future.

Tax rules depend on individual circumstances and may change.  If you need more information on tax, please speak to an adviser.

 

2. Dominic’s story - Helping to pay a future inheritance tax bill

About Dominic            

Dominic is 64 and has one son William, who’s 5 years old. Dominic lives with his partner, Diane, who is financially independent, in her own property.

Dominic has a small property investment portfolio of £1,200,000, which gives him enough income to live off. He also has £500,000 in savings, which he uses for extra expenses, such as holidays and maintaining his properties.

Dominic’s goals

Dominic’s aware that there could be a large inheritance tax bill to pay when he dies but doesn’t want to give up access to his money as he’s not sure what the future holds. He wants his son William to inherit his entire estate but is worried that William won’t have the funds to pay the inheritance tax bill.

Choosing a bare Probate Trust

After speaking with his adviser, Dominic chooses our bare Probate Trust. With this trust, the death benefits from the investment bond can be paid without the need to get probate. This means that when Dominic dies, William could have quicker access to the funds. These funds can then be used to pay any inheritance tax on Dominic’s estate.

Quick access to funds to pay inheritance tax

Dominic dies 15 years later and the trustees are able to give William the funds quickly. Because of the Probate Trust, William can settle his dad’s inheritance tax bill using the proceeds from the investment bond, rather than having to use his own money.

What are the risks?

The value of your investment can go down as well as up and you may get back less than you invest. The way investments performed in the past is not a guide to how they’ll perform in the future.

Tax rules depend on individual circumstances and may change. Speak to an adviser, if you need more information on tax.