Tax Trusts & Wills

Tax Trusts

In addition to establishing your insurance, this section provides useful information surrounding trusts, taxation and wills.


A will is a legal document that sets out your wishes regarding the allocation of your possessions and the care of any minor children.

Only by making a Will can you be sure that, when you die, everything you own will pass to the people of your choice. Irrespective of whether you consider yourself having much in the way of possessions or money, it is important to make a will because:

  • If you die without a will the laws of intestacy dictate how your money, property or assets are allocated, your loved ones have no control.
  • If you have a partner but are not married or in a civil partnership, you cannot inherit their assets unless there is a will in place. Without a will, the death of a partner could cause serious financial problems for the remaining partner.
  • If you have children, a will is essential in making arrangements in nominating a guardian(s) if one or both parent’s die.
  • A will may be able to reduce your inheritance tax liability if advice is taken.

We refer to an independent third party for the preparation of Wills.

The Financial Conduct Authority do not regulate tax planning and Will preparation.

Gift Inter Vivos

This is a specialist type of life policy designed to provide cover against the potential inheritance tax (IHT) liability of a potentially exempt transfer (a gift) made by an individual out of their estate. 

For the gift to fall outside of the estate for IHT purposes you must survive for seven full years from the date the gift is made. If you die within this period the potentially exempt transfer is deemed to have failed and tax may be due depending on legislation. If tax is due, it is calculated on a decreasing scale from the fourth year until the seventh year has passed.

Inheritance Tax

Inheritance tax (IHT) is a tax on personal property and assets you leave behind when you die, and some gifts that you make during your lifetime.

A certain amount can be passed on tax free without attracting a tax liability, this is known as the nil rate band, currently the first £325,000 of your estate value. Simply put, assets above this threshold are currently taxed at 40%.

Married couples and civil partners can pass their entire estate value onto each other tax free. In addition the surviving partner is permitted to use the unused nil rate band of the deceased to increase their tax-free allowance. This can potentially double the tax-free allowance for the surviving partner without the need for any specialist tax planning.

IHT is a threat to more people than ever as property prices rise while the nil rate band has remained static since 2007. Insurance policies such as Whole of Life and Gift Inter Vivos can prove a simple but effective method in protecting your likely IHT liability.

The Financial Conduct Authority do not regulate tax planning and Will preparation

Whole of Life

One of the main reasons people take out whole of life cover is to protect their Inheritance Tax Liability (IHT). A whole of life policy written into trust ensures a tax free lump on death to your chosen beneficiaries which can then be used to pay your IHT liability.


A trust is a legal arrangement. It allows the owner of the property to transfer legal ownership of that property to another person or company. The person or company receiving the property holds onto it for the benefit of a third party, called the beneficiary.

The person transferring the property is called the settlor. The person or company holding onto the property is called the trustee.

An overview of how a life insurance policy written into trust can benefit you.

  • Drastically reduce or avoid Inheritance tax (IHT) as the trust places the proceeds outside of your estate.
  • Proceeds will be appointed quicker to your beneficiaries, rather than going into your estate, where it will not be distributed until probate (or confirmation in Scotland) has been granted.
  • If the intended beneficiary is a minor a trustee can be appointed to oversee the property until the beneficiary is of legal age.
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