Can anyone who knows kindly tell me what the pros and cons of this practice are, apart from what I list?
If a policy is written into trust it bypasses ones estate and cannot be raided automatically by creditors, including HMRC for inheritance tax. (These creditors will have to be paid eventually, but there is a breathing space.) The proceeds can go direct to named persons The proceeds bypass probate so beneficiaries can have the money at short notice.
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Oddly, I was discussing just such a policy with my Mother recently as she was reviewing her will etc.
Policy, begun c1980s, pays on second death of (a) my Father (b) Mum and is written in trust for my sister and I. Dad, who died in 1997, entered into it for express purpose of providing cash to meet 'death duty' and other expenses.
IIRC the annual contributions were treated for IHT purposes as gifts to my sister and I and were set at a level less than the annual gift exemption then on place so as to avoid complications in event of sudden death. The policy became paid up around 1994.
Solicitor's advice last year was that it was still effective for purpose Dad intended but no idea if that is still case were a policy to be started today.
I guess the technicalities are around (a) ensuring the trust is written in corret terms for its objetive (b) IHT considerations over contributions/premuims or value of a polciy when made over to trust.
Professional advice recommended.
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No advice about trusts. As Bromp says, you really need to get professional advice. But I can give you a tip.
If you need to phone HMRC for anything be prepared for a long wait.
I called HMRC today to try and find out why they thought I owed them a load of unpaid tax. I was on hold for fifty two minutes before I spoke to someone. That's 52 $£$^'ing minutes!
Thankfully, the person I eventually spoke to was on the ball and explained what the problem was and what they would do to sort it out.
Oh, and if you want to complain about the service, they tell you to ring the 0300 number again or write to them.
Only HMRC could get away that.
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>> Oh, and if you want to complain about the service, they tell you to ring
>> the 0300 number again or write to them.
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>> Only HMRC could get away that.
Nah, the railway TOCs are same.
Wait times for (a)Civil Service Pensions and (b) Student Finance England are similar.
(a) Has had 14 months to work out how hitting 55 affects the pension that was part of my redundancy deal but they're still making me wait. (b) cannot understand why (a), which affects The Lad's loan/grant, is so difficult.
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Praise where due..............I may have said this before, yes - I think I have - but the Overseas Pension dept. of the Pension Service , in Newcastle on Tyne, is brilliant.
The phone is answered quickly by a real person with nice Geordie accent and the operator actually knows the answer to your query and actually carries out a promised action!
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It's a long time since I have had to ring the tax people but due credit too for their online system. Compared with the old 60 odd pages of paper you had to wade through it's a breeze. You are only shown the questions relevant to you, It tells you what you owe, or in my case are owed and at the end of the process the refund was in my bank account within 72 hours.
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Of all the people you have to phone to sort these kinds of problem out I find HMRC to be the most efficient. After I submitted my self assessment returns on Tuesday I discovered I had given them a set of figures from the wrong year. Phoning next day to explain what I'd done I found the lady who answered the call to be polite, professional and very efficient. The error was corrected quickly and without any fuss. True I had to queue in the system for nearly ten minutes after the usual "Press one if you want..." business, but this time of year they are snowed under by the leave it till the last minute brigade such as myself.
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I'm currently engaged in a kind of ping-pong game with HMRC. We owe them about £7,000 in corporation tax. Every time I transmit the money, I get an automated response and the money comes back again a few days later with a posted letter saying we are owed a repayment. I again send the payment, and the same thing happens.
The explanation is that their section processing receipts works at a different speed from that processing assessments, and one has not caught up with the other. One is automatic, the other requires humans to read things.
Each time they send a repayment they add on about 50p representing the interest they owe.
Yet I just know that the instant they finally get themselves together the interest balance will swing the other way, and we shall be penalised for missing a deadline.
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The problem with my tax was that the company I worked for recently sold our business unit to another company.
HMRC asked each of them to provide an estimate of my total remuneration for the 2014/15 tax year, which they did. HMRC then added the two amounts together, effectively doubling my salary. The result was a demand for thousands in unpaid taxes.
Yesterday, the postie delivered a letter from my bank telling me that I hadn't responded to their request for certified documentation proving my residency. They were therefore sharing my financial details with the IRS since they considered me as resident in the US for tax purposes. I called to tell them that I'd never received their original letter, unfortunately their computer system was 'having problems' so they had to write it down.
This morning I got the end of year statement from my US bank account. The interest rate for 2014 was a whopping 0.15% and they had included a new 'handy aid' to help with my IRS submissions.
I have a feeling that I might be filling in a lot of tax forms soon.
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>> I'm currently engaged in a kind of ping-pong game with HMRC.
Somebody has a target to bring money to account within n days or return it.
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Writing life assurance policies in trust - Bromptonaut
