Life insurance - which trust?

[rsbmw]

Wife and I have a joint life policy from when we took out our first mortgage in 2010. It's insufficient, so we're now looking to set up individual policies with more cover / longer term.

The idea would be that if one of us dies, the money goes to the other. If we both die, money should go to our daughter (currently 3). Should probably have the flexibility to add in additional children/grandchildren down the line.

What sort of trust should we use for this, discretionary?
Who should the trustees be, I expect my wife for my policy and vice versa, but can trustees also be beneficiaries?
What happens if we all die, would the payout from the policy simply be subject to probate and any other relatives would be able to claim it? Any benefit to adding parents/siblings etc as beneficiaries of the trust (lower priority of course)?

[Ozzie Osmond]

You need to talk to a professional advisor. Two reasons for that,
1. The questions can only be answered in the context of a full understanding of your health, financial position, hopes for the future etc
2. The subject is simply too complex for quick guidance on a forum.

Essentially you have two things to consider at the same time,

• Do you want to buy life/critical illness insurance and, if so, how much?

and

• Could the use of trusts be helpful in your overall financial planning?

[rsbmw]

Im comfortable with life insurance, this specifically relates to what sort of trust is suitable for the requirement. Thanks for the reply though

[Jockman]

Do intestacy laws fulfill your requirements?

[rsbmw]

Not with regards to inheritance tax, and the idea would be to specify the beneficiaries (and trustee as relates to our daughter) rather than leaving people to work it out later.

I will certainly be putting the policy into trust, but I don't have any experience here.

[Jockman]

Putting a life policy into trust is a great move but does not your last will and testament take care of the minutiae?

[rsbmw]

May be wrong, but I don't believe wills cover trusts, and if I pick the wrong type it would be problematic (such as no ability to add beneficiaries, spouse not receiving payout etc)

[Jockman]

rsbmw said:

May be wrong, but I don't believe wills cover trusts, and if I pick the wrong type it would be problematic (such as no ability to add beneficiaries, spouse not receiving payout etc)

You can write trusts into your will. Please take advice on this.

[dalenorth]

Yes it's a discretionary trust you need. We write these trusts for life policies so drop me a PM if you'd like any help as some can be completed online which is far less hassle?