A look at how policies need to be written in trust to avoid hefty inheritance tax issues. Taking out a policy shows consideration and love to your nearest and dearest. It means you have the peace of mind that comes with knowing that, as much as possible, life for them will go on without added financial burden. However, many people are making the mistake of not writing these policies in trust. This means that any payouts will be added to the inheritance of your family and could take them above the nil rate band for inheritance tax. If a policy is written in trust this will enable the sum to be excluded from the overall estate of the policy holder, freeing it from inheritance tax liability. It also has the ability to speed up payouts, whether or not it would be liable for the extortionate tax. Recent changes in the law mean that assets worth 300,000 pounds for individuals and 600,000 pounds for couples are the limit before any tax liabilities. Any assets over that amount would be subject to inheritance tax at a rate of 40%. The latest figures to be released show that over the course of one year, 11,000 insurance policies worth a total of 597 pounds million were
subject to inheritance tax. Had all these policies been written in trust, you can be quite sure that inheritance tax would not have been applicable on any of them.
Will reading and distribution of assets can be a notoriously lengthy procedure. This can be put a huge financial strain on the family. With policies that are written in trust would be paid out immediately, making things a whole lot easier.
Not putting policies in trust is costing customers millions of pounds every year in unnecessary inheritance tax. Apparently, only 10% of people write their in trust. Even if you already have a policy in place, it is possible to easily put it in trust.
Whether you purchase your over the net, over the phone or through a shop, they should all come with the chance of writing in trust. It seems odd that so few people take up this opportunity. Maybe it is a case of not getting the right advice?
Life insurance comparison websites abound but there is concern that they are not serving the customer well. It has been found that many people will take out the cheapest but this doesn't necessarily mean that is the one that is most suitable to their circumstances.
The British Insurance Brokers Association have called for the Financial Services Authority to overhaul regulations regarding these insurance comparison sites. They believe that when people check out these sites, they barely take notice of the policy details, just the price. They even take this price comparison as 'advice'. This is a good case of cheapest not always meaning best.
Whatever happened to people taking responsibility for themselves? Surely, if they take out a policy without concerning themselves with the details, they are throwing their money away. Many people take out a policy with their mortgage as is necessary but instead of shopping around will go with the mortgage providers own insurance simply because it is easier.
Take control, by all means shop around to get the best deal, but don't take one purely on the cost of the policy because it may not help very much right at the time when it is most needed.
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