A prolific media commentator on personal finance maintains that despite the hype and criticism of the Autumn Budget, protecting future wealth through a trust remains unaffected.

Junaid Afzal from Haven Financial Planning speaking specifically about the Budget and life insurance in national media earlier maintained that he will be continuing to encourage clients to put life insurance into a trust.

“There are many reasons for recommending this,” explained Junaid.

“Putting life insurance into a trust has been proven to be a very good succession tool and the Autumn Budget won’t change that.

“If you have an existing IHT liability, putting life insurance into a trust can protect your future estate.

“There are different types of trusts so choosing the right one can be complex and, decisions about the policy may need to be agreed by all trustees.

“Critically, always seek the advice of an IFA when placing life insurance into a trust simply because you have to follow very specific rules in order for the process to be legally binding.

“However, all this is outweighed by the benefits.

“Putting life insurance into a trust enables you to name a beneficiary so they can access the funds efficiently and without fuss. Providing faster financial support to family is often seen as a huge benefit.

“This is linked to the fact that assets in a trust do not have to go through probate, which can cause severe delays. In addition, it also protects the payout from being used to pay off any outstanding debts of your estate.
“Given the decline of marriage as a trend,  trusts also protect unmarried partners so, e.g. , cohabiting partners can receive a payout directly, rather than it becoming part of your general estate and subject to intestacy laws.

“There are also rules on how you can fund a life insurance policy. Using surplus income is the best route because of the existing IHT exemption rules involved in doing this.

“As an overview, a life insurance policy written in trust enables the proceeds to typically avoid being considered as part of your legal estate. This avoids any payout being regarded as contributable to the value of your estate. If that was the case and you went beyond the IHT threshold, this would be taxed at 40%.”