Does putting life insurance in trust avoid inheritance tax?
Life insurance
The short answer
It can help, but it depends. When a policy is written in an appropriate trust, the payout is usually not counted as part of your estate, so it may not be subject to inheritance tax. The outcome depends on the type of trust, who owns the policy and pays the premiums, and your wider circumstances.
Trust charges
Some trusts, such as discretionary trusts, can face their own tax charges in certain circumstances, though many protection trusts never do.
Get the right advice
Because the rules are complex, speak to an adviser or solicitor about your situation.
Other reasons for a trust
Even where inheritance tax is not a concern, a trust can mean faster payment and more control.