Putting Life Insurance Policy in Trust and IHT

[CCCS]

My partner and I have a few life insurance policies that we want to put in trust.

All the policies are single life policies but the premiums are paid from our joint bank account.

The advice booklet with the trust document from one insurer says "Where a policy which has been taken out by one person only i.e. a single life policy, is to be put in trust, payment of premiums for the policy should not come from a joint bank account held by the policyholder with a named or potential beneficiary as this could have adverse Inheritance Tax consequences".

I've asked them what the adverse IHT consequences could be but they've told me to ask an IFA for advice. I no longer have an IFA.

Can anyone tell me what the adverse consequences could be. I'm also curious why payment from a joint bank account can cause a problem.

We could start making future premium payments from bank accounts in our sole names but I wonder how payments for the last 5+ years from a joint bank account affects things in respect of IHT.

[N8CYL]

Exactly the same predicament for me.... Following for replies

[dalenorth]

We’re brokers and are happy to help if needed. Just drop me a pm.

Trusts can be complex and I believe it’s the issue of ownership if its paid from a joint bank account if that person isn’t a trustee. In reality the person will nearly always be one of the trustees.