Change of Beneficiaries to a Trust


(martyn.dixon) #1

A client of mine is seeking advice regarding a life policy. It was taken out in 1967 and is now worth in the region of £75,000. On his death, the policy pays to his wife, who has sadly pre-deceased him.

I am, therefore, anticipating that, on his death, the policy pays to his wife’s estate, which by virtue of her Will, will then pass to him, thereby increasing his, already substantial estate, resulting in a greater IHT liability.

The policy makes no allowance for variation of the beneficiaries.

I am struggling to think of a solution,

Any idea would be greatly appreciated.

Martyn Dixon
Harold Bell Infields & Co


(Simon James Northcott) #2

His estate already includes the value of the right to receive the policy as default/sole beneficiary under his wife’s Will. Therefore he needs to assign that right elsewhere, and survive 7 years.

Simon Northcott


(John Cartlidge) #3

As Simon says or, if I have understood correctly, if the policy is an asset of the predeceased wife’s estate, could her executors/administrators (or if the policy is written in trust), the trustees encash/surrender the policy? Husband could then gift the funds.

We have a not dissimilar situation; wife (predeceased) is the policy owner, (no trust involved in the policies), surviving husband the life assured.

John Cartlidge
Campion Solicitors


(Simon Leney) #4

I agree with Simon Northcott’s diagnosis.

The only query I have is the statement that the life policy “is worth £75,000”. If it is straight life assurance and if that is simply the current death benefit, I don’t think that is the value, because the life assured has yet to die. In that circumstance the policy represents a right to receive a payment at some unknown point in the future, and presumably in the interim cessation of payment of premiums would result in cessation of cover. Of course if there is a surrender value of £75,000 right now then the policy would be worth that amount.

Simon Leney
Cripps LLP