Must the Trustees pay benefits to a particular Beneficiary?
In the event of a claim, the life insurance company pays the claim proceeds to the trustees, who at that point choose which of the beneficiaries they will appoint a benefit to, and in what proportion.
For example, if you are survived by your spouse, and assuming your spouse is a beneficiary; (which would normally be the case) the trustees can appoint 100% of the benefits to your spouse.
Providing the trust has no value at a 10th anniversary, there will be absolutely no liability to Inheritance Tax, no matter which of the beneficiaries receives money or how much money they get.
You could write a 'letter of wishes' to your trustees, expressing your preference as to which of the beneficiaries, depending on the circumstances, should be paid money from the trust in the event of your death. Such a letter would not be binding on the trustees, but could give them guidance.
OPTION TO LEND MONEY FROM THE TRUST INSTEAD OF OUTRIGHT GIFT:If you take a policy out to provide money for your spouse or partner if he or she survives you, but if not, you intend the money to go to your child or children, then instead of making an outright appointment of the proceeds to the surviving parent, the trustees may make an interest-free loan; creating a debt against the surviving parent's estate, repayable on their death, which would create a debt against his or her estate. This could save Inheritance Tax upon your partner's ultimate death, as his or her estate not only would NOT CONTAIN the payout from your policy, as it was only loaned to them not gifted, and THEIR ESTATE gains a further benefit, by having to repay to the trust the amount that was loaned to them from your trust when you dies. This doubles-up the Inheritance tax saving! |
