Make sure it reaches the people you love.
The short answer
Putting life insurance in trust means the policy is held by trustees for the beneficiaries you choose, rather than forming part of your estate. The payout can usually be made without waiting for probate and, in many cases, is not counted for Inheritance Tax. Most insurers provide trust forms at no extra charge when you apply.
Who this cover may suit
- You want the payout to reach your family quickly, without waiting for probate.
- Your estate, including the payout, could exceed the Inheritance Tax threshold.
- You want control over who receives the money, such as children.
- You are unmarried and want the payout to go directly to your partner.
When to consider another option
- You have a joint first-death policy — trust options may be limited. See joint life insurance.
- Your situation is complex, such as a blended family or business ownership — consider legal advice.
- You want the policy to be used to repay a lender directly — check how the trust and mortgage interact.
How it works
Tell us about you
A few simple questions about your age, health and what you want to protect.
Choose amount and term
Pick how much cover you want, its shape and how long it should last.
Review real options
See options based on your answers, with a real person to help if you want one.
How a life insurance trust works
When you take out a policy, you can complete a trust form. You become the settlor, you appoint trustees — people you trust to manage the money — and you name beneficiaries. If you die, the trustees claim the payout and pass it to the beneficiaries under the trust’s terms. This is a feature you can add to a standard term life insurance policy at no extra cost with most insurers. MoneyHelper explains the basics of life cover. [2] GOV.UK sets out how trusts and their taxes work. [14]
| Policy in trust | Policy not in trust | |
|---|---|---|
| Who receives the payout | Beneficiaries via trustees | Your estate |
| Probate | Usually not needed for the payout | Usually needed first |
| Inheritance Tax | Often outside your estate | Can count towards the threshold |
| Control | You choose who benefits | Follows your will or intestacy rules |
Types of trust
Insurers commonly offer an absolute (bare) trust, where beneficiaries are fixed, and a discretionary or flexible trust, where trustees can decide who benefits from a group you name. HMRC explains how different trusts are treated for Inheritance Tax, including the periodic and exit charges that can apply to some discretionary trusts. [5] Our full trusts guide compares them in depth.
| Absolute (bare) trust | Discretionary trust | |
|---|---|---|
| Beneficiaries | Fixed and named, cannot usually change | A wider named group; trustees decide who benefits and when |
| Flexibility | Low — simple and certain | Higher — can respond to changing family circumstances |
| Suits | Adult beneficiaries you are certain about | Young children, or families wanting flexibility |
| Inheritance Tax treatment | Generally straightforward | May be subject to periodic or exit charges in some cases |
Why Inheritance Tax matters
Inheritance Tax is usually charged at 40% on the part of an estate above the £325,000 threshold. [4] A large life payout could push an estate over that line. A trust can often keep the payout outside the estate, but rules depend on the trust type and circumstances.
An unmarried couple using trusts
Fictional example: Ellie, 37, and Jordan, 39, unmarried, a daughter aged 5, a jointly owned home. No prices are shown because real premiums depend on underwriting.
- Cover
- Two single level policies
- Trust
- Each policy in a flexible trust
- Beneficiaries
- The other partner and their daughter
- Trustees
- Each other plus a sibling
The payout could reach the surviving partner quickly without depending on a will. See our joint vs single guide for why single policies suit trusts.
How long a trust claim usually takes, and does it affect my will?
A trust does not need probate, because the trustees, not your executors, hold the legal right to claim. GOV.UK figures show that probate applications submitted without issues are increasingly dealt with in a matter of weeks rather than months, but a trust claim does not need to wait for that process at all. [15] Writing a policy in trust does not change your will: the trust deed simply sits alongside it and governs that one policy, while your will continues to deal with everything else you own. If your will and your trust name different people, the trust terms normally take priority for that payout, which is why both documents should be reviewed together, ideally when either one changes.
Claiming on a policy in trust
Trustees make the claim with a death certificate and the trust deed. Our claims guide explains each step. Families who lose a spouse or civil partner may also be able to claim Bereavement Support Payment. [10] Over a long term, ONS inflation data show why the real value of a fixed sum falls. [9]
Life insurance in trust at a glance
What works well
- Payouts usually avoid the wait for probate.
- Often kept outside your estate for Inheritance Tax.
- Usually free to set up with your insurer.
What to watch
- Some trusts are hard to change once set up.
- Trustees must be chosen carefully.
- Joint policies may have limited trust options.
A parent updating an old policy
Fictional example: Victor, 52, widowed, remarried, with two adult children from his first marriage and a stepdaughter. His existing policy from 15 years ago has no trust attached. No prices are shown because real premiums depend on underwriting.
- Problem found
- Without a trust, the payout would form part of his estate and follow his current will
- Trust chosen
- A discretionary trust naming his wife, both adult children and his stepdaughter
- Trustees appointed
- His wife and his solicitor, to avoid relying only on family to decide
- Letter of wishes
- Written separately to guide the trustees on how he would like the payout shared
The policy can now reach whoever the trustees decide is in need, using his letter of wishes as guidance, without waiting for probate on his wider estate. GOV.UK explains how probate applies to the rest of an estate separately.
The FCA’s market study into pure protection found that competition generally works well, while noting many households remain underinsured. [3] Answer every application question accurately: under the Consumer Insurance (Disclosure and Representations) Act 2012 you must take reasonable care not to misrepresent. [6]
Employer death-in-service cover is valuable, but MoneyHelper notes it usually ends when you leave the job. [7] If a claim is ever disputed, the Financial Ombudsman Service handles complaints about insurers free of charge. [8]
Keep exploring
Frequently asked questions
What does it mean to put life insurance in trust?
Putting life insurance in trust means the policy is held by trustees for the benefit of people you choose, known as beneficiaries, instead of forming part of your estate when you die. You usually do this by completing a trust form from your insurer when you apply, or later. If you die, the trustees claim the payout and pass it to the beneficiaries according to the trust’s terms. This can mean the money arrives faster, without waiting for probate, and is often not counted for Inheritance Tax.
Should I put my life insurance in trust?
For many families it is worth considering. A trust can let the payout reach your family without waiting for probate, which can take months. It can also keep the payout outside your estate for Inheritance Tax, which matters if your estate could exceed the £325,000 threshold. It gives you more control over who receives the money. It is less straightforward for joint first-death policies, and complex family or business situations may need legal advice. Most insurers offer standard trust forms free of charge.
Does a trust avoid Inheritance Tax on life insurance?
In many cases a life policy written in an appropriate trust is not counted as part of your estate, so the payout is not subject to Inheritance Tax when you die. However, the tax treatment depends on the type of trust, the value involved and how the policy is set up. Some trusts can face periodic or exit charges in certain circumstances. HMRC publishes guidance on how trusts are taxed. If your estate is large or complicated, consider professional advice before choosing a trust.
Who should I choose as a trustee?
Trustees are the people who will claim the payout and manage it for your beneficiaries, so choose people you trust, who are organised and likely to be around when needed. Many people appoint their partner plus one or two others, such as a sibling or close friend, so there is always more than one trustee. You are often a trustee yourself while alive. Talk to people before naming them, and review your choices after major life events, such as a separation or the death of a trustee.
Can I change my trust later?
It depends on the type of trust. With an absolute or bare trust, the beneficiaries are fixed and usually cannot be changed, which gives certainty but little flexibility. A discretionary or flexible trust lets trustees choose between a wider group of possible beneficiaries, and you can usually add or remove trustees. You may also be able to write a letter of wishes to guide trustees. Because some trusts are hard to undo, think carefully before you sign, and check with the insurer what can be changed later.
How much does it cost to put life insurance in trust?
Most UK insurers provide standard trust forms free of charge, either as part of the application or afterwards, so there is often no direct cost to setting one up. Your premiums do not usually change. If your situation is complex, for example if you own a business, have children from different relationships or a large estate, you may choose to pay for legal or tax advice to make sure the trust does what you intend. Our full trusts guide explains the common choices and the questions to ask.
Does putting life insurance in trust affect my will?
No, a trust attached to a life insurance policy sits alongside your will rather than replacing it. The trust deed only governs that one policy and names who should benefit from its payout; your will continues to deal with everything else you own, such as property, savings and possessions. Because the two documents can name different people, it is worth reviewing them together, particularly after a marriage, divorce, new child or remarriage. If a policy is in trust, the trustees — not your executors — are responsible for that payout, and it is usually not something your will can override once the trust is set up.
How long does it take for a life insurance trust to pay out?
There is no fixed timescale, because it depends on the insurer and how quickly the trustees can provide a death certificate, the trust deed and any other requested information. In general, a claim on a trusted policy can be dealt with without waiting for probate, since the trustees hold the legal right to claim rather than your executors. That is one of the main reasons families choose to put policies in trust: wider probate can take weeks, and sometimes longer where an estate is complex, while a straightforward trust claim does not depend on that separate process at all.
Sources
- Association of British Insurers — Protection insurers pay out £7.84 billion in claims in 2025 (2026-06-29)
- MoneyHelper — What is life insurance? (2026-09-28)
- Financial Conduct Authority — MS24/1.5 Market Study into the Distribution of Pure Protection Insurance Products: Final Report (2026-09-21)
- GOV.UK — How Inheritance Tax works: thresholds, rules and allowances (2026-09-28)
- HM Revenue & Customs — Trusts and Inheritance Tax (2010-11-08)
- legislation.gov.uk — Consumer Insurance (Disclosure and Representations) Act 2012 (2012-03-08)
- MoneyHelper — Life insurance through work (2026-09-28)
- Financial Ombudsman Service — Complain about a financial business (2026-09-28)
- Office for National Statistics — Inflation and price indices (2026-09-17)
- GOV.UK — Bereavement Support Payment (2026-09-28)
- legislation.gov.uk — Income Tax (Earnings and Pensions) Act 2003 (2003-04-10)
- GOV.UK — Funeral Expenses Payment (2026-09-28)
- NHS — Cancer (2026-09-28)
- GOV.UK — Trusts and taxes (2026-09-28)
- GOV.UK — Probate waiting times halved thanks to Government push (2025-02-14)
- GOV.UK — Applying for probate: Apply for probate (2026-09-28)