Life Assurance
Adviser area– If you’re a customer please visit the customer section
Introduction
Life assurance can be important in estate planning by providing a tax-free lump sum on death, which can be used to cover Inheritance Tax liabilities or other expenses. When written in Trust, policy proceeds typically fall outside the estate for IHT purposes and are paid directly to chosen beneficiaries. This helps preserve family wealth and provides liquidity at a crucial time.
The essentials
- A term assurance policy can also be used where a client has made lifetime gifts that are potentially exempt transfers (PETs) or chargeable lifetime transfers (CLTs). The policy term will need to allow for the seven-year rule and any previous gifts that would fall into the IHT calculation.
- Gift inter vivos policies are a type of term assurance specifically catering for lifetime gifts. They are used when a lifetime gift is over the limit for the Nil Rate Band.
- Whole of Life policies pay a lump sum on death for the whole of the insured’s life, not a limited term. They can be ideal for paying Inheritance Tax on the deceased’s estate.
More to think about
- Existing life policies and whether to write them in Trust
- Joint Life First Death policies
- 10 yearly periodic charges on policies written in Trust, and the role of multiple Trusts
- Investment Bonds in Trust
- Source of funds in estate planning for a couple
- Premiums
- Legal owners of life policies – single vs joint vs lives assured
More information
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Click to view page: Click to view Estate Planning Manual
(For adviser use only)