Flexible split trust
For Protection
Our Flexible Split Trust allows the person taking out the trust to nominate beneficiaries as well as allow the trustees to use their discretion when deciding who should benefit from the trust capital. It’s also a split trust so the policy holder can receive benefits from a critical illness and a terminal illness claim. The trustees hold the death benefit for the beneficiaries of the trust.
Key benefits
- Decisions about who will benefit can be changed.
- 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.
- It can help your client to reduce any potential Inheritance Tax (IHT).
Other information you need
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Flexible Split Trust may be suitable for clients:
- Who take out a life policy which includes critical illness/terminal illness cover.
- Who, if they become ill, want any critical illness or terminal illness benefit to be paid for their own benefit.
- Who want a trust designed to cover the above situation by allowing the policy benefits to be paid to the trustees for the benefit of the settlor, whilst maintaining the inheritance tax (IHT) position of the trust.
- Who want the flexibility to nominate default beneficiaries with the appointed trustees having overall discretionary powers to decide who will receive any payment.
- Who want to avoid any delay in paying out the proceeds of their policy which may otherwise occur where probate (or confirmation) is required before payment could be made.
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- The trustee discretion allows for future changes, for example, to include future children or grandchildren.
- Your 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.
- The death benefits payable will not form part of the client’s estate and will be free from IHT. The trust may be subject to entry, periodic and exit charges but as our protection policies are regular premium and have no surrender value, this is highly unlikely.
- The benefits are paid to the beneficiaries quickly if there is a surviving trustee.
- The trustee discretion allows for future changes, for example, to include future children or grandchildren.
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- If you have decided that a Flexible 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.
We cannot treat a benefit as being under trust until we have received the trust documentation fully completed and signed.