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Putting your protection policy in trust

Putting your protection policy in trust

What is a trust?

A trust allows the owner of a life policy (the settlor) to specify who can benefit from the policy proceeds after they die (the beneficiaries). The terms of the trust are set out in a trust declaration. In essence, the settlor plus one or more other individuals (the trustees) hold the life policy and are bound to act in accordance with the terms of the trust declaration.

The legal effect of the trust is that you have given away the death benefits under the life policy. You cannot change your mind as it is not yours any longer. However, you will still receive any critical illness benefits and, in some cases, any terminal illness benefit.

You, however, remain responsible for paying the premiums.

Why use a trust?

When is a trust not appropriate?

If the trust is for an investment plan, and you need to be able to access the proceeds or capital during your lifetime.

If the policy is a joint life policy for the benefit of the joint party (the survivor) it shouldn’t go into trust.

What trust forms might you need?

If you have a financial adviser it’s usually worth asking them for help if you’re not sure on what forms to fill out. If you don’t have a financial adviser you can get help on Money Helper or Unbiased. We have also put together a handy Flexible Trusts Guide which we strongly recommend reading through before filling in any of the forms.

HSBC Life Flexible Trust – for use in the UK

HSBC Life Letter of Wishes form

HSBC Life Deed of Appointment and or Retirement of a Trustee

Do you need to make a change to an existing trust?

You’ll likely need a form specific to your circumstances. Get in touch with us in one of the following ways and we’ll get the form to you. Give us as much detail as you can about what you’d like to change so we can send you the right form.

How does the digital Flexible Trust form (or paper version of the PDF) work?

This is a PDF Flexible Trust form, which can be filled in and digitally signed using software such as Adobe Acrobat (which is free to download and use on your mobile or tablet). You can also print the form off and complete in black ink, the choice is yours. You can then return the form to HSBC Life by email or post. 

Watch our guides to digitally signing your Trust form on your PC or mobile phone.

How to digitally sign a Trust Form on a PC.

How to digitally sign a Trust Form on a mobile.

What is different about the new digital Flexible Trust form (or paper version of the PDF)?

The key differences are: 

The form can be filled in signed electronically, using software such as Adobe Acrobat. But, you still have the choice to print it out and fill it in and sign with black pen if you’d prefer.

You no longer need to have your signatures witnessed. This makes the form easier to fill in however you choose to do it. 

You can now appoint two additional Trustee’s in the form itself, without needing to complete a separate Deed.

The same form can be used for the whole of the UK, so there’s no longer a need to fill in a separate form if you want Scot’s Law to apply, just fill in one extra box within the digital Flexible Trust form itself. 

What is the Letter of Wishes Form?

A Letter of Wishes is your opportunity to give guidance to those managing your estate on how you would like the assets of the Trust to be dealt with. Unlike a will, a Letter of Wishes is not legally binding, and the executors are not legally obliged to follow any requests made in the letter. Therefore, if you wish to ensure that certain personal possessions go to certain beneficiaries, perhaps because these items have sentimental value, this should be dealt with in your will.

While a letter of wishes is no substitute for a will, it can provide practical and emotional support to executors, family members and trustees created in the will. While some laws regarding wills and inheritance differ throughout the UK, a letter of wishes can accompany a will whether you live in England, Scotland, Wales, or Northern Ireland.

Note to Customer

The Flexible Trust form has been produced as a draft Trust for you and your legal advisers. The legal and tax effects will depend on your individual circumstances. HSBC Life (UK) Limited and its advisers accept no responsibility for ensuring that this draft Trust meets your personal requirements. If you are in any doubt about the terms or the effect of the Trust, it is your responsibility to seek legal or tax advice as appropriate.