Life Insurance payout into a trust and Will ?

[TwigtheWonderkid]

Steve Campbell said:

the idea of IHT drives me nuts.....we work long and hard for our £££...in order to enjoy what we want to do in life, and provide for our children when we go if we are lucky enough to amass some wealth. The fact we pay income tax on all that, and then if successful the tax man comes and takes away again doesn't compute for me.

Edited by Steve Campbell on Monday 20th June 16:22

For many people I suspect the major part of their total wealth has come from house price inflation, on which tax has never been paid. That's certainly true in my case.

I've done sweet f.a. for most of my money, other than to live in London. And certainly never paid a bean in tax on it.

Sorry if that bucks the "worked my fingers to the bone for my kids" mantra.

[ukshooter]

PostHeads123 said:

I became a dad a few months back and live with the mother we are not married and don't intend to marry. I'm lucky and own my house out-right and in my sole name but the inheritance tax if I left it to my partner / son would be large, I want them to be able to remain in the property so I want to make sure I leave enough cash to cover the inheritance tax due.

I was going to cover the inheritance tax via life insurance I get through work and I read that I can have this paid into trust so that money does not incur inheritance tax, does that sound correct ? I also read that life insurance companies tend to offer the 'put in trust' option when you take out the insurance but I get my from work so not given this option, I was told though I could have the beneficiary of my life insurance as the trust, this being the case I take it would be a solicitor who would set up the trust and generally how much would it cost we talking a few hundred or a few grand ? Also once the trust is setup does it have to yearly things like submit returns or anything ?

Finally is there any other way to leave my house to either my son or partner without them incurring the inheritance tax ? I refuse to marry just to avoid it.
cheers

Edited by PostHeads123 on Thursday 16th June 13:29

Edited by PostHeads123 on Thursday 16th June 13:30

You could be missing an important point here. A lot depends on the type of cover your employer/work is providing. It is quite possible that it is already in trust and the trustees would pay the benefits free of IHT to your financial dependents/or who you have nominated via an expression of wish.

If for some reason it is not already in a trust, the relevant life insurance company could easily send you a fairly easy to complete trust form. You have a couple of choices really, discretionary or absolute. Both have advantages and disadvantages. In my business we include this type of advice when we arrange life insurance but I am not an IFA so cannot tell you what an IFA would charge you to help.

[Jockman]

TwigtheWonderkid said:

Steve Campbell said:

the idea of IHT drives me nuts.....we work long and hard for our £££...in order to enjoy what we want to do in life, and provide for our children when we go if we are lucky enough to amass some wealth. The fact we pay income tax on all that, and then if successful the tax man comes and takes away again doesn't compute for me.

Edited by Steve Campbell on Monday 20th June 16:22

For many people I suspect the major part of their total wealth has come from house price inflation, on which tax has never been paid. That's certainly true in my case.

I've done sweet f.a. for most of my money, other than to live in London. And certainly never paid a bean in tax on it.

Sorry if that bucks the "worked my fingers to the bone for my kids" mantra.

Add to that the fact that the beneficiaries have paid no tax at all on the inheritance.....

None of my "wealth" has come from house inflation and despite doffing my cap to this viewpoint I shall be making all arrangements possible to ensure as much as possible is handed to the next generation.

[TwigtheWonderkid]

Jockman said:

TwigtheWonderkid said:

Steve Campbell said:

the idea of IHT drives me nuts.....we work long and hard for our £££...in order to enjoy what we want to do in life, and provide for our children when we go if we are lucky enough to amass some wealth. The fact we pay income tax on all that, and then if successful the tax man comes and takes away again doesn't compute for me.

Edited by Steve Campbell on Monday 20th June 16:22

For many people I suspect the major part of their total wealth has come from house price inflation, on which tax has never been paid. That's certainly true in my case.

I've done sweet f.a. for most of my money, other than to live in London. And certainly never paid a bean in tax on it.

Sorry if that bucks the "worked my fingers to the bone for my kids" mantra.

Add to that the fact that the beneficiaries have paid no tax at all on the inheritance.....

None of my "wealth" has come from house inflation and despite doffing my cap to this viewpoint I shall be making all arrangements possible to ensure as much as possible is handed to the next generation.

So will I, but the usual claptrap of "I've already paid tax on it" is largely nonsense.

[Ozzie Osmond]

TwigtheWonderkid said:

So will I, but the usual claptrap of "I've already paid tax on it" is largely nonsense.

You probably had mortgage tax relief as well....

But don't forget, the incredibly cheap mortgage money available for the last 8 years is a weird aberration.

[PostHeads123]

ukshooter said:

You could be missing an important point here. A lot depends on the type of cover your employer/work is providing. It is quite possible that it is already in trust and the trustees would pay the benefits free of IHT to your financial dependents/or who you have nominated via an expression of wish.

If for some reason it is not already in a trust, the relevant life insurance company could easily send you a fairly easy to complete trust form. You have a couple of choices really, discretionary or absolute. Both have advantages and disadvantages. In my business we include this type of advice when we arrange life insurance but I am not an IFA so cannot tell you what an IFA would charge you to help.

Thanks, I asked my employer a few weeks back, chased and still waiting for answer, the wording of the policy does mention 'a trust', for employer provide life insurance schemes is that how they tend to work they go into one big trust then they distribute free of IHT ?

[TwigtheWonderkid]

Ozzie Osmond said:

TwigtheWonderkid said:

So will I, but the usual claptrap of "I've already paid tax on it" is largely nonsense.

You probably had mortgage tax relief as well....

But don't forget, the incredibly cheap mortgage money available for the last 8 years is a weird aberration.

Yes, I did have mortgage tax relief!!

If I hadn't have been paying my mortgage (regardless of the rate) I'd have been paying rent, and seen no tax free windfall at all. Everyone has to pay one way or another for a roof over their heads.

[Rick101]

PostHeads123 said:

May be true but not the point I don't believe in marriage.

Stick to your guns OP. Don't forgo your beliefs.

Too many divorce threads on here to link to!

[Kateg28]

My partner and I are both divorced and have been living together for 6 years. At some point in the future we will get married and it is mainly for IHT reasons. We are delaying as I want a new kitchen and need the money for that (we will have a good party with our nearest and dearest when we do tie the knot).

For the sum of money involved for Inheritance Tax, it is worth it.

Btw, the child is the real commitment. I am divorced and would be able to have nothing to do with my ex if it wasn't for our son. As it is, I will be having contact to a greater or lesser degree for my entire life (my son's wedding, other family occasions etc).

[PostHeads123]

ukshooter said:

You could be missing an important point here. A lot depends on the type of cover your employer/work is providing. It is quite possible that it is already in trust and the trustees would pay the benefits free of IHT to your financial dependents/or who you have nominated via an expression of wish.

If for some reason it is not already in a trust, the relevant life insurance company could easily send you a fairly easy to complete trust form. You have a couple of choices really, discretionary or absolute. Both have advantages and disadvantages. In my business we include this type of advice when we arrange life insurance but I am not an IFA so cannot tell you what an IFA would charge you to help.

You were right after a bit more digging it was confirmed that any pay out would go into trust automatically and paid to person on my expression of wish so free of IHT, thanks

[ukshooter]

PostHeads123 said:

You were right after a bit more digging it was confirmed that any pay out would go into trust automatically and paid to person on my expression of wish so free of IHT, thanks

No worries! There are some clever tricks you can do with death in service benefits so both partner can benefit free of IHT and subsequently the children can inherit from the partner IHT free (without spending hundred's with a lawyer)