Life insurance in trust

[vik2001]

If you put life insurance into a trust is it free of IHT. Is the 10 year anniversary tax payable?

[maths]

A lifetime settlement of a life policy is a chargeable transfer for IHT and thus in principle subject to a 20% charge on the policy’s value.

However it is likely that the value will fall within the £325000 nil rate band.

Yes 10 year charges are in point.

[AGoodman]

Term insurance is generally considered to have a very low value unless the life assured is on their deathbed.

Insurance with a surrender value would generally have the surrender value.

[TW1234]

Does not the nature of the trust affect the answer?
If into an absolute trust would it not be free of IHT at the time of transfer & not have 10 year tax consideration
(although becoming a PET )?

[maths]

A bare trust is not a settlement for IHT purposes and hence there would not be any ten year charges. Also a gift on bare trust is a PET.