Family Life Assurance Trust

The Family Life Assurance Trust is an effective tool for estate planning that is established outside a Will. Unlike other trusts that may be referenced in the Will, the Family Life Assurance Trust is established specifically for life assurance policies. The process of assigning appropriate policies to the trust enables the removal of the sum insured from the policy holder's estate for the purpose of inheritance tax (IHT) calculation, and protects the proceeds from the beneficiaries' remarriage, divorce, creditor claims, and IHT.

In order to maximise tax efficiency, multiple Family Life Assurance Trusts may be necessary, along with multiple policies. Each trust should be structured in such a way that it receives less than the IHT Nil Rate Band. By placing a life insurance policy into a trust, the proceeds from the policy will not be included in the policyholder's estate for inheritance tax purposes, meaning that the beneficiaries will receive the full amount of the death benefit without any deductions. This can provide a significant tax saving for the policyholder's beneficiaries.