Split Trust - Life Insurance

Life insurance may one day give your family the financial support they need if you were to die. It does not matter why you take out the insurance it can be for a number of reasons all it means is that in the event of death whilst the policy is still in force the plan would pay out a lump sum which was agreed when taking out the plan however many years or months ago. Putting life insurance under trust means that on a life insurance plan the benefit would automatically payout to the named beneficiary on the trust form or to the instructions left in your will or possible to your next of kin if there was no agreed beneficiary. Putting the plan also into trust means that the benefit amount would not then be added to the value of the estate, if a trust is not in place then the benefit amount becomes part of the estate and therefore subject to any IHT limits at the time. Once the money becomes part of the estate, it may then be a few months before your family will receive any money as it has to go through probate. So this may give various advantages of putting a plan into trust from day one of you being on cover no matter which provider it is that you have taken the insurance with.

If critical illness insurance is also added to the plan then the policy may need other provisions to be made to ensure the money goes to the right person at the right time. For example the plan may need to be put into trust for various reasons and with a critical illness with life insurance plan this would tend to need a split trust form to be completed. The main reason to put a critical illness with life insurance plan under split trust means that the policy structure would pay out on different circumstances, for example if you were suffer from one of the listed critical illness within your plan the split trust form would ensure you yourself would get the lump sum to then allow you to use the money however you wish. The money may be needed then to help support you and your family if you no longer have a monthly income from you job, pay for the various equipment needed in your home to help you be as self sufficient as possible to help lead a normal life or for some they may wish if they get through the illnesses pay for a family holiday to help those move on from what they have just been through.

A split trust can be very simple to complete as most providers offer a trust guide form to help you with any areas that may seem complicated or confusing and as this will become a legal document you want to ensure that it is completed to exactly the policy holder's intention if something were to happen to him or her.