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Discover how to save 40% tax on your life insurance payout by putting it in trust. Our expert guide explains everything you need to know about protecting your family’s inheritance – and it’s completely free.
Most people don’t realize that without a trust, their life insurance payout could be reduced by 40% tax. This comprehensive guide explains how putting your life insurance in trust protects your family’s financial future – and best of all, it’s completely free.
A trust is a legal arrangement that keeps your life insurance separate from your estate.
Think of it as a protective wrapper around your policy that ensures the full payout goes directly to your loved ones.
Recent HMRC data shows this simple step saves thousands of families from unnecessary tax bills each year.
When someone dies, their estate often takes months to settle through probate. However, your family needs financial support immediately.
A trust solves this by allowing your life insurance to pay out within weeks, not months.
Consider Sarah and John’s story: As an unmarried couple with two children, they assumed John’s life insurance would protect Sarah if he died.
Without a trust, Sarah would have received nothing – the money would have gone to John’s parents under intestacy rules.
A trust ensures the right people receive the money, regardless of marital status.
When probate typically takes 6-9 months, a trust allows payment within weeks of death.
This immediate access to funds prevents financial hardship when your family needs support most.
Currently, inheritance tax takes 40% of anything above £325,000.
A trust keeps your life insurance outside your estate, meaning your family receives every penny tax-free.
On a £500,000 policy, this could save them £70,000 in tax.
You decide exactly who receives the money and when. This proves invaluable for:
• Unmarried couples
• Families with children from previous relationships
• Business protection arrangements
• Complex family situations
Ideal for growing families, allowing you to change beneficiaries as needed.
You maintain control while still gaining tax benefits.
Offers maximum tax efficiency but can’t be changed once established.
Perfect when you’re certain about who should benefit.
Combines protection for your family with access to critical illness benefits for yourself.
Particularly useful if your policy includes illness cover.
At xwills.com, we’ve made trust setup straightforward and free when you arrange life insurance through our FCA-regulated partners.
Our expert team guides you through every step:
First, we’ll discuss your circumstances and recommend the most suitable trust type.
Then, we’ll help you choose appropriate trustees – typically 2-3 reliable people who’ll manage the trust according to your wishes.
We handle all paperwork, ensuring everything’s completed correctly.
You’ll receive ongoing support, including regular reviews to keep your arrangements up to date.
When you arrange your insurance through us, you’ll receive:
• Free trust setup (worth £199)
• Discounted will writing
• Complimentary estate planning review
• Lifetime support and guidance
Life changes, and your trust can usually adapt.
Marriage, divorce, new children – our team helps you review and update your arrangements as needed.
We recommend reviewing your trust every 3-5 years or after any significant life event.
Many people worry trusts are complicated or expensive. With xwills.com, neither is true.
We handle the complexity, and our trust setup is free with your insurance policy.
Some fear losing control of their policy. In reality, most trusts allow you to maintain significant control while protecting your family’s financial future.
Protecting your family starts with a simple conversation.
Our experts will explain your options clearly, answer your questions, and help you make informed decisions about your family’s financial security.
Contact us today for your free consultation. We’ll help you understand how a trust could protect your loved ones and guide you through creating the right arrangement for your circumstances.
Remember, setting up a trust costs nothing but could save your family thousands in tax and months of delays. Take the first step toward protecting their future today.
[Note: This article reflects current UK legislation as of 2024.]
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The information provided in this article on what you should never put in your will is for general informational purposes only and does not constitute formal legal advice. While we strive to provide accurate and up-to-date information, laws and regulations may change over time. For your specific situation, it is always best to consult with a qualified professional who specialises in wills and estate planning. They can guide you through the process of properly drafting and executing your will, ensuring it is legally valid and tailored to your unique needs. Services like XWills.com offer expert will writing assistance from licensed professionals. Speaking with them directly will give you the personalised attention and formal legal guidance needed to achieve your estate planning goals and protect your legacy.
Co-Founder, CEO and Senior Will Writer at Xwills.com
Andrew Walters is the co-founder and CEO of Xwills.com, an estate planning firm that combines technology with personalised customer service to elevate the will writing experience. As a full member of the Society of Will Writers, Andrew is committed to upholding the highest professional standards in the field.
Driven by a passion for providing comprehensive support to clients, Andrew pursued formal qualifications in will writing and estate planning. This journey led to the establishment of Xwills, where he and his team fill a gap in the market by offering a tailored alternative to online-only will writing services.
At Xwills, Andrew ensures that each client receives the time and attention needed to understand their specific requirements. He strongly believes that something as important as writing a will should not be rushed or done without expert guidance.
As a member of the Society of Will Writers, Andrew adheres to their code of practise and continues to expand his knowledge through annual training.
His expertise, combined with Xwills’ commitment to customer service, positions him as a trusted resource for those seeking to protect their legacy and provide for their loved ones.
With his dedication to professionalism and personalised service, Andrew Walters is setting a new standard in the estate planning industry.
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