Trusts and Tax
Putting a VitalityLife plan into trust has never been easier.
What is a trust?
A trust is an arrangement which allows your client to gift an asset, such as a life assurance plan, to other people without giving them total control and legal ownership of it.
With a trust, your client who is known as the settlor, can transfer the legal ownership of an asset to someone. This person is the trustee, of which your client is automatically one. Trustees will look after the asset and can use it only for the people your client wants to benefit. These people are called "the beneficiaries".
All about trusts
What are the benefits of putting something into trust?
Writing a plan into trust is a tax-efficient and sensible way to protect your clients’ policies and makes sure that the proceeds are paid to your clients’ chosen beneficiaries.What policies can be put into trust?
A VitalityLife plan can be put into trust whenever it suits your clients – at application or at a later date. Existing policies and PruProtect policies can also be put into trust. Where the plan is being placed into a business trust it is essential that the trust is only applied at application, in order to avoid unwanted and potentially expensive capital gains tax implicationsHave you tried our Trust Flowchart?
What are the benefits of trusts?
Setting up a trust can be easier than you think:
Tax planning
Assets held in a valid trust won't be subject to Inheritance Tax (IHT) as part of your client’s taxable estate on death. Instead, it will be subject to its own regime. If the assets aren't in a valid trust, it is included in the taxable estate and potentially up to 40% could be lost to the taxman.
Flexibility of gifts
When an asset is held in trust, your clients may be able to influence the way the assets are distributed, along with which beneficiaries they are distributed to - either as acting as co-trustee or via a private side letter of wishes after death.
Protection
Trusts can provide a layer of protection from third party claims. While funds are held in a discretionary trust, none of the potential beneficiaries has any right to them. The trustees can hold the funds back until a more suitable time for the intended beneficiaries to benefit.
Useful links to make trusts easier
Our literature libraries house our full suite of trust documents, helpful guides and case studies.
Signature-free online trust solution
Our online solution makes it quicker and easier for you to place protection plans into trust, eliminating the need for written signatures. It also enables you to set up a trust as part of the protection application using our Adviser Hub self-service portal.
This solution is available for all new Personal and Business Protection plans.
Still unsure about Trusts?
Take a look at our Trust FAQs.
