Life Insurance Policy Written in Trust

A life insurance policy is "written in trust" when the policyholder, at the point of taking the policy out, signs a separate trust deed naming the beneficiaries who are to receive the payout on death. The trust is the legal owner of the policy proceeds; the insurer pays the trustees, who pay the beneficiaries.

The practical consequences are significant. The payout is outside the deceased's estate. It does not pass under the will, it does not pass under intestacy, it does not require grant of probate before payment, and it does not count towards the nil-rate band for inheritance tax purposes. Trustees can usually claim within days of the death, against a death certificate and the trust deed.

A policy not written in trust pays into the estate, in which case the proceeds form part of the estate's assets, are subject to the probate process, and count towards inheritance tax. For an estate already close to the nil-rate band, a non-trust policy can push it over the threshold and trigger 40% tax on the excess.

Trust status is set when the policy is taken out and is recorded on the policy paperwork. It cannot easily be added retrospectively, although some insurers offer a deed-of-assignment route to put an existing policy into trust during the policyholder's lifetime. Trust status applies to most term-life and whole-of-life policies sold by UK insurers; mortgage life cover is sometimes assigned to the lender rather than written in trust.

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Last verified: 29 April 2026 against published industry guidance from major UK insurers and the Association of British Insurers.