Single or Multiple Trusts for Life Insurance Policies

I have recently taken on a client who would like to assign multiple life insurance policies totalling approximately £4.5m to a discretionary trust. The policies have only just been taken out so there shouldn’t be any immediate IHT concerns. I was wondering whether there were any advantages/disadvantages either way in creating a single discretionary trust to assign the policies or multiple discretionary trusts?

I would appreciate any assistance or recommendations.

Tom Payne
Attwaters Jameson Hill

Whilst there may be no immediate IHT concern, as the value of the
policies grow periodic and exit charges might become a cause for

I would be inclined towards the use of multiple trusts, created on
separate dates, and for the policies to be settled on separate dates
also, in order to maximise the nil rate band available to each trust on
such occasions.

Against this, though would need to be balanced any additional set up and
administration costs over the anticipated life of the trusts.

Paul Saunders

It seems to me that if you put £4.5m into a discretionary trust you are probably expecting the trust to continue after the death of the life assured. If so, and the trust continues for as long as ten years from the death, your client is exposed to potential IHT (the ten-yearly charge). This could be avoided if you have a few pilot trusts.

Julian Cohen

Simons Rodkin