What does writing a policy in trust mean?
Writing a life policy in trust means the payout belongs to the trust rather than to your estate. It is normally paid without waiting for probate, sits outside the estate for inheritance tax, and goes to the people you named — not to whoever your will happens to say.
Most insurers provide trust forms free at application, and existing policies can usually be assigned into trust afterwards, though gifting an existing policy has its own consequences. Bare trusts fix the beneficiaries; discretionary trusts keep flexibility and are the usual choice where children are young or circumstances may change.
The difference is stark. A £500,000 policy inside an estate above the nil rate band can lose £200,000 to inheritance tax and take months to reach the family. The same policy in trust pays roughly £500,000, often within weeks.
It costs nothing and takes minutes. It is the highest-return administrative task in personal finance, and it is skipped constantly — usually because nobody checked whether the form was ever completed.