Hi
My wife and I have two separate individual Life insurance policies with the same Insurance company. Both are level term and were taken out in February 2011 for 23 years and have terminal illness cover. They were not taken out to cover a mortgage. My cover is greater than that of my wife (450k and 300k) and that is reflected in the premiums that are paid. The premiums are paid from a joint (my wife and I) bank account. Currently the policies are not in trust and no beneficiaries are named on either policy.
I wish to put the policies into individual trusts where the beneficiaries would be our 3 children (currently aged 20, 17 and 14) - neither my wife would benefit from my policy on death or terminal illness or vice-a-versa. I had done some reading around Life insurance policies and trusts and my reason for doing this was to help with IHT.
On contacting the provider I received the necessary documentation and I thought I just needed to fill it in. The option they provide is a Discretionary Gift Trust (protection).
As I was reading the information that came with the trust documentation it stated that "if you have a spouse or civil partner and have taken a life insurance policy on your life only, you shouldn't pay the premiums from a joint account. This is because it may affect your inheritance tax position."
Now I am questioning what the best option is to do - is it to set up payment for the individual policy premiums from separate individual accounts and then place the policies into the discretionary gift trust option or should we cancel the current policies and look at setting up new policies into trusts from the beginning.
Any advice would be appreciated.
Thanks
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