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18.03.2025
Should you nominate a beneficiary or write your life policy in trust?
Many people don’t realise that beneficiary nomination can be a simple alternative to putting a life insurance policy in trust. But is it the right choice?
What’s the Difference?
✅ Beneficiary nomination – You name who should receive the payout directly. This can be quicker and easier than a trust.
✅ Writing in trust – The policy is placed in a legal trust, keeping it separate from your estate and ensuring more control over distribution.
Pros & Cons of Each:
🔹 Beneficiary Nomination
✅ Fast and simple – No legal setup required
✅ Payout bypasses probate – Speeds up access to funds
⚠️ May still count toward inheritance tax (IHT) – Depending on policy type and jurisdiction
⚠️ Less flexibility – Once nominated, you can’t easily change how funds are distributed
🔹 Writing in Trust
✅ Can reduce IHT liability – Policy payout isn’t part of your estate
✅ Gives more control – Trustees manage distribution to beneficiaries
⚠️ More setup involved – Requires legal documents and ongoing management
⚠️ Potential delays – If trustees aren’t proactive, payouts can be slowed
So, which is better?
- If you want simplicity and speed, beneficiary nomination works well. But if tax efficiency and control are priorities, a trust is usually better.
- Choosing the right approach depends on your circumstances. Would you go for ease or long-term planning?
I am an Independent Financial and Mortgage Adviser and have worked in Financial Services for over 12 years. During my career I gained experience in assisting both individual and corporate clients.…
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