Trust wIll the right option?

[LucasA]

Hello,

Basically we have just had a child last year, reasonably large mortgage and I own a house with my girlfriend but we are not married - I need to be responsible now.

If I die she could not keep the house because she doesn't earn much, so I bought life insurance to cover the mortgage if I die plus a bit more. If I die because of my work, there's a decent chance my family might see a large pay-out from this too. So potential estate could be £500k to £1m+ depending on how I die.

I know my partner will not get IHT waived because we are not married. I also want to make sure money is safeguarded from any re-marriage in future and make sure that my daughter gets money safeguarded for when she is older. Is a 'trust will' what I should be looking at? I have seen these for around £250. Or should I be looking at a full bore trust which is about a grand, which I obviously would rather not pay for, or is there something else I should be looking at?

Asking on here in the past has been helpful, any insight much appreciated as always.

Cheers

Lucas

[cs174]

I'm not an expert but I've put my life insurance into a trust so it's separate from my estate.

Speak to Dale North on here or www.pureprotect.co.uk who'll be able to advise.

[Dixy]

Wow you would have thought this sort of thing would have been sorted centuries ago so that when you form a relationship and decide to reproduce there would be some form of statutory protection. Wonder what they could call it.

[norush]

Purgatory?!

[anonymous-user]

Dixy said:

Wonder what they could call it.

It's existed since 1975 and is called the Inheritance (Provision for Family and Dependents) Act 1975. The Act enables a court to alter the distribution of the estate of a deceased person to any spouse, former spouse, child, child of the family or dependant of that person in cases where the deceased person's will or the rules of intestacy fail to make ‘reasonable financial provision’.

A few thoughts for OP,

• In your situation Critical Illness insurance is equally or perhaps even more important than life cover. Many more people find themselves incapacitated than suddenly dead.
• Lifetime trusts can be a right PITA and there are costs involved around operating them sensibly. Consider starting a SIPP (£2,880 p.a. buys £3,600 of investments) or one of the ISAs for Junior before getting into the fancy stuff.
• Will trusts are pretty normal if there's a significant estate.
• Life policies usually let you nominate any prospective beneficiaries that you choose.

[Simpo Two]

Dixy said:

Wow you would have thought this sort of thing would have been sorted centuries ago so that when you form a relationship and decide to reproduce there would be some form of statutory protection. Wonder what they could call it.

Marriage.

What do I win?

[dalenorth]

So a standard life insurance trust will be suffice to keep the benefits out of the estate. Always ensure that there’s enough income to support the child until dependency so maybe 20-50k pa net depending on circumstances.

Either way you should definitely speak to a solicitor and get a will drawn up.

[LucasA]

Thanks for the above. Its helped a little but still think I need to go and see someone.

[dalenorth]

Your death in service will more often than not also be in trust, so if your main assets will be the life policy and the DIS then this will sit outside of your estate. So you might find there is no IHT.

Having said that you are wise to get legal advice. If you need any helps with trusts then drop me a pm.