When you die you want the majority of your wealth to go to your loved ones, not HMRC and life insurance can help do this.

But did you know, there is a risk that a life insurance payment on death could be taxed for inheritance tax at 40%?

There is a solution however - write the life insurance policy in a trust - often at no extra cost.

This essentially means that rather than the sum being paid out as part of your estate on death (and thus which could result in a tax bill at 40%), instead it goes into a trust for your loved ones. The result is ultimately the same, your loved ones will receive the life insurance payment, however you don’t risk paying IHT of 40%. Also an added advantage is the insurance payout is made probably quicker from a trust.

In summary - the benefits:

·       Protection from Inheritance Tax - ensures the payout is not included in your estate meaning the whole sum will go to the beneficiaries.

·       Quicker access to money – when you die without a trust your beneficiaries need to obtain a probate which can be a lengthy process. With a trust, your beneficiaries could receive access in a matter of weeks.

The Financial Conduct Authority do not regulate trusts and inheritance tax planning.

Tax treatment varies according to individual circumstance and is subject to change