Absolute split trust
For Protection
Our Absolute Split Trust clearly defines the beneficiaries and their share at outset. The beneficiaries cannot be changed once the trust has been set up.
This is a split trust meaning the life assured, or settlor, retains an interest in the policy allowing them to receive any benefits from a critical illness claim and from a terminal illness claim where applicable. The trustees hold the death benefit for the beneficiaries of the trust.
Key Benefits
- Beneficiaries and their shares are clearly defined.
- Benefits are paid free from Inheritance Tax (IHT).
- A client can keep the right to receive critical illness and terminal illness benefits, whilst ensuring the benefits payable on their death are dealt with efficiently.
Other information you need
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Absolute Split Trust may be suitable for clients:
- Who want a trust designed for use with life policies which include critical illness and/or terminal illness cover.
- Who want a trust that works in the same way as any other absolute trust in that specific beneficiaries are named to receive the benefits held under the trust.
- Who are happy that once the trust has been set up, the beneficiaries can’t normally be altered, even if circumstances change.
In the event of a claim for terminal illness or critical illness, any payment will be made to the trustees for the benefit of the life assured or settlor.
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- If the only purpose of the policy is to provide funds for the chosen beneficiary(ies), for example, a disabled dependant.
- The policy proceeds will not form part of the settlor’s estate and will be free from IHT, including entry, periodic and exit charges, should the trustees be holding the benefits for a prolonged period of time. For example, until a child reached an agreed age.
- The benefits are generally paid to the beneficiaries quickly, provided there is a surviving trustee, as the benefits are not included in the settlor’s estate and probate is avoided.
- A client may use this when they want someone else, such as their children, to benefit from the policy on their death, whilst ensuring proceeds resulting from illness are still payable to themselves.
- If the only purpose of the policy is to provide funds for the chosen beneficiary(ies), for example, a disabled dependant.
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- If you have decided that an Absolute Split Trust is suitable for your client, please complete our e-signature trust form. OR
- If you prefer to use our editable PDF form, please send us the completed and signed trust documentation as soon as possible. This means that you can complete the form and email it to your client for them to print and sign.
Completed trust forms can be sent to us either by email (a scanned copy or even send a photo) or by post.
Please remember to include the relevant plan number and ensure that the form has been signed and dated.
Email: Protect@scottishwidows.co.uk
Address:
Scottish Widows Protect Servicing Team
PO Box 24171
69 Morrison Street
Edinburgh
EH3 1 HRPlease note: We cannot treat a benefit as being under trust until we have received the trust documentation fully completed and signed.
Important considerations
Trusts are documents with legal significance that may affect the rights, obligations and tax position of your client and the beneficiaries. You should not proceed unless you are satisfied that you understand its effect and that it achieves your objectives. If you have any doubts or uncertainties you should seek the appropriate legal guidance. Special consideration may be required where persons are either resident or domiciled outside the UK.
We cannot treat a benefit as being under trust until we have received the trust documentation fully completed and signed.