What Exactly Is A Trust?

The best way to think of a trust is to imagine you have a treasure chest. In this treasure chest, you put instructions as to what you want out of your life insurance policies. When you die, you close the treasure chest and you lock it with three separate locks. You then have 3 separate keys and give them to close friends or family. Those three people know as trustees, have a key to open the box. With your instructions, they can then share the money, in the places you want it to go and whoever you want it to go with.

To have a trust, you need to have at least one trustee. It is recommended to have 3 trustees and they should be people of a similar age. In addition, it should be people that are quite good with finances and admin as they also pick your beneficiaries. If your policy is not in trust when you pass away, the proceeds of your policy will form part of your estate and it must go through probate.

You could be talking 12 to 18 months before that policy will pay. Whereas if the policies are in a trust then it will be paid within 10 to 30 days.

When talking to people about trust, we talk about the three Rs.


If you have recently separated from your partner and you have yet not divorced, and you have a policy that is not a trust, the proceeds of that policy will go to your ex husband or wife. It could be that you have children and one of them maybe needs more money as they are more dependant on you. If the policy is not a trust, then the money will be split evenly between the children. With a trust in place your money can go to whoever you want it to go to.


You want to make sure that your trust is set so that that the right people get the right amount of money. If it is in a trust, then it will be paid out tax free. Also, being in a trust, you will not have to worry about inheritance tax.


Normally people take out life insurance to provide for their family and any debts once they are gone. When you die, you want your family to get the money immediately like mentioned previously. If your policy is not in a trust, then your family will not get the money right away when they need it.

To go with your trust, it is recommended that you have a letter of wishes. It is not legally binding, but it is a guide for your trustees to ensure that your personal wishes are carried out. You must take care to remember that your letter of wishes cannot conflict your will.


It is always better to be prepared for the future. At any time, you can change your policy into a trust by speaking to your adviser

If you currently have a life insurance policy that is not in a trust, do not worry, this is something we could assist you with. Please visit out website and get in touch if you would like further assistance – http://firststopmortgagesandprotection.com/

Alternatively, you can call this number 02838332787.

The content within this blog was accurate at time of publication (30th April 2020) and is subject to change.