Life Insurance payout into a trust and Will ?

[PostHeads123]

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

[PostHeads123]

Above the higher rate IHT threshold

Edited by PostHeads123 on Thursday 16th June 15:43

[PostHeads123]

Ginge R said:

A decent adviser will not charge for putting your cover into trust.

You have lots of options re your home - please, take advice. What's right for someone here, may not be right for you for a multitude of reasons.

Thanks but who is best to go to for advice on this a financial advisor or solicitor ? I spoke to one solicitor so far and as soon as I explained my situation he couldn't offer help / advice, may be a cr*p solicitor.

thanks

[PostHeads123]

Jockman said:

What higher IHT threshold?

Why would you refuse to marry if it would save them £100k?

40% I thought that was higher rate but seems to be all 40% for all of it above the threshold.

I don't believe in marriage, never have, never will end of.

[PostHeads123]

AndrewEH1 said:

You seem to be in a serious relationship with this woman and have a child together. If you split up you'd have to pay her just as you would if you got divorced.

Just get married for a ~£200 at the local register office, the cheapest and easiest way to avoid tax should the worst happen.

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

[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 ?

[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