When it comes to estate planning, one of the key concerns is how to reduce the tax burden for your beneficiaries. A Section 72 life insurance policy is designed to help cover inheritance tax (CAT) liabilities. But did you know that by placing your policy in trust, you can gain even more advantages?

Here’s how setting up a Section 72 policy in trust can benefit you and your loved ones:

1. Faster Payout – No Probate Delays

One of the most significant benefits of setting up your policy in trust is avoiding the delays associated with probate. The proceeds from the policy can go directly to the beneficiaries or trustees, ensuring that funds are available quickly to settle any tax bills.

2. Protection from Creditors

By keeping the policy separate from your estate, it can protect the proceeds from creditors’ claims, ensuring the funds go where they’re needed most: covering inheritance tax or helping your loved ones.

3. Control Over Who Gets the Payout

When you establish a trust, you can specify exactly how you want the proceeds to be distributed. This can be particularly important if you have complex family dynamics, special requirements, or simply want to ensure the funds are used wisely.

4. Privacy

Unlike probate, which can be a matter of public record, a trust keeps the details of the policy and its payout confidential. If maintaining privacy around your financial affairs is important, this is a key benefit.

5. Maximize Tax Efficiency

The primary goal of a Section 72 policy is to cover the inheritance tax liability. By holding the policy in trust, you ensure that the payout goes directly toward this purpose and isn’t counted as part of the taxable estate.