Can Executors put a life policy in trust?


(Karen Shakespeare) #1

H is the life assured but W is the policy owner.
W predeceased H.
When H dies, the policy will pay to W’s estate (and is currently registered in the names of her executors). The beneficiary of W’s estate is H.
H doesn’t want his estate to inherit the policy proceeds from W’s estate because it will increase IHT in his estate, but he’s out of time to use S142 IHTA.
Can W’s executors (the current “owners” of the policy) declare a trust over the policy?
The financial adviser thinks yes, I think no.

Karen Shakespeare
Geoffrey Leaver


(Simon James Northcott) #2

The executors should assign the policy to H and give notice to the life company. H can then gift it.

Simon Northcott


(Kamlesh Samji) #3

My understanding is that the policy is already in his estate for the purposes of IHT (assuming he benefits from W’s estate). It just won’t pay out until he dies (unless there is an option to surrender earlier).
It is just owned by the executors like any other asset.
So, either (on H’s instructions) executors can surrender it if that is an option, then husband can do what he wants with the money, or they can assign it to him, and again, he can then either surrender it, or gift it away (via a further assignment).

Kamlesh Samji
KRS Estate Planning