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Writing a life insurance policy in trust: married, or not?

Whether a trust changes your inheritance tax position depends on one thing first: whether you're married or in a civil partnership. This page works through both answers.

If you're married or in a civil partnership

Why the tax question drops away

Being married or in a civil partnership changes what the trust question is actually asking. Tax mostly isn't it. What's left is how quickly your spouse gets the money, and who's steering it until they do.

  1. The exemption that does the work

    An estate left entirely to a spouse or civil partner is normally exempt from Inheritance Tax, under GOV.UK guidance. A life insurance payout that ends up forming part of your estate and passes to your spouse falls under that same exemption. That's the reason the usual tax worry doesn't apply here.

  2. What's actually being decided instead

    With tax out of the way, writing the policy in trust stops being a tax decision and becomes a practical one. It's about two things: how long your spouse waits for the money, and who has a say over it in the meantime.

  3. Speed, and control

    Those are the two things a trust actually changes for a married or civil-partnered couple.

    Speed

    A policy not written in trust is usually paid out once your estate has been formally settled, which takes time. A policy written in trust can bypass that step, so your spouse isn't waiting on it.

    Control

    A trust lets you name who holds and manages the money and on what terms.

Spousal exemption: GOV.UK, read 2 October 2026.

If you're not married or in a civil partnership

How the payout fits into your estate

If you're not married or in a civil partnership, a policy on your own life follows a different path through your estate. Here's what that path looks like, step by step, when the policy sits outside a trust.

  1. You own the policy on your own life

    If you've taken out a policy insuring your own life and nobody else legally owns it, you're both the person insured and the policyholder. That's the usual starting point for a policy that hasn't been written in trust.

  2. The payout joins everything else you own

    HMRC's Inheritance Tax Manual says a policy held this way forms part of your estate when you die (IHTM20012, read 2 October 2026). Your executor adds the payout to your savings, your share of the house and everything else you leave behind before working out what's owed.

  3. Inheritance tax is then worked out on the total

    Because you're not married or in a civil partnership, the exemption that lets a spouse or civil partner inherit an estate free of inheritance tax doesn't apply to you. The payout is treated the same as any other asset, so it can add to the total your estate is taxed on.

    What this means for your own estate depends on its total value and your circumstances. A solicitor or an FCA-authorised adviser can confirm how it applies to you.

    Policy stays outside a trust

    The payout sits inside your estate and is assessed for inheritance tax along with everything else, once probate, letters of administration, or confirmation in Scotland has been granted.

    Policy written in trust

    The proceeds are treated differently, covered in the next part of this guide.

This sets out what HMRC's guidance says about estates in general. It isn't a substitute for advice on your own circumstances from a solicitor or an FCA-authorised adviser.

What happens if your policy is not in trust

A life insurance payout usually goes to a named beneficiary, but if the policy sits outside a trust, the insurer still has to satisfy itself that it is paying the right person. Without a trust in place, that check is normally tied to the same legal process that deals with the rest of your estate, and the insurer waits for it to finish before releasing anything.

The grant that releases the money

In England and Wales, that process produces a grant of probate if you left a will, confirming the will is valid and naming who can act on your behalf. Where there's no will, the equivalent is letters of administration, which gives someone the legal standing to deal with your estate instead. In Scotland, the equivalent document is called confirmation, issued by the sheriff court. Under HMRC's Inheritance Tax Manual (IHTM20211, read 2 October 2026), a policy held outside a trust is usually paid once probate, letters of administration or confirmation has been granted.

What that means while the grant is pending

Applying for a grant takes paperwork and takes time, and nobody can lawfully administer the estate until it is issued. In practice, that means the policy money sits with the insurer during that period, even though it was bought to cover exactly these costs: the mortgage, the funeral, the household's living expenses. A trust changes this because it puts the money under the control of named trustees from the moment of death.

Worth checking with your insurer: ask what they need from the person claiming, and whether they offer any interim payment while the grant is being sought.

Does the ten-yearly periodic charge apply to a life policy trust?

A trust set up to hold a life insurance policy is usually a kind of relevant property trust, which is the type of trust that carries its own HMRC charging rules, separate from the rules that apply to an ordinary estate. One of those rules is the ten-yearly periodic charge. At each ten-year anniversary of the trust, HMRC can charge inheritance tax on the value the trust holds above its own nil-rate band, under guidance set out in the Inheritance Tax Manual (IHTM20181).

When the charge can apply

The charge only applies where the trust is holding value at that point. A trust holding shares, property or savings can build up value year on year, so a periodic charge is a real possibility for those. The charge is worked out on what's in the trust on the day of the anniversary.

Why it rarely applies to a term life policy trust

A term life policy pays out only if the person insured dies within the term, and has no cash value while they're alive. Until a claim is made, there's nothing for the trust to hold, so there's nothing for the anniversary charge to be worked out against. Where a claim is paid, trustees normally pass the proceeds to the beneficiaries fairly quickly. That is usually well before the next ten-year anniversary arrives.

The charge becomes a live question mainly where proceeds stay in trust for a long period, for example when a beneficiary is a child and the money is held until they reach a certain age. In that situation it's worth asking the insurer or a solicitor how the trust deed deals with it, since the detail depends on how the trust is written.

Scotland: confirmation

When someone dies in Scotland, their estate doesn't go through probate or letters of administration. It goes through confirmation, which is the Scottish court process that gives an executor the legal authority to deal with the estate. The name is different and so is some of the procedure, but the function is the same: nobody can access the money until the court has granted it.

For a policy that isn't written in trust, this matters in exactly the way probate matters in England and Wales. The insurer pays out to the estate, and the estate can't be distributed until confirmation has been granted. Your family can be waiting on that process at the same time as they're waiting on the money.

Why a trust still works the same way here

Writing a policy in trust avoids confirmation in Scotland for the same reason it avoids probate in England and Wales. A policy in trust isn't part of the estate at all. The trustees hold the right to the payout directly, so they can claim it and pass it to the beneficiaries without waiting for the court to confirm anyone's authority over the estate. The mechanism is identical north and south of the border; only the name of the court process changes.

What this means if you're setting up a trust in Scotland

The inheritance tax position for a policy in trust doesn't change depending on which part of the UK you're in. Whether a trust affects your inheritance tax position still depends on whether you're married or in a civil partnership. What changes in Scotland is only the name of the process a trust lets your family skip, and worth checking with your insurer: that confirmation is the term they'll recognise when you're asking how a trust affects the timing of a payout.

Questions about writing a policy in trust

Can you write an existing policy in trust, or does it have to be done when you take the cover out?

A policy can be written in trust at any point after it starts. Many people only look at this once they've worked out whether they're married or in a civil partnership and decided a trust is worth having. The usual step is to complete a trust deed and send it to the insurer, who then notes it against the policy. Ask your insurer which trust form they accept, since the paperwork isn't identical across providers.

Does the insurer charge for writing a policy in trust?

Whether there's a charge depends on the insurer you're with and whether a solicitor is involved in drafting the deed. The way to find out is to ask your insurer directly, before you complete the form. If you want the deed drafted to your own wishes, ask a solicitor separately whether their involvement carries a fee.

What should you ask your insurer before writing a policy in trust?

It helps to go in with specific questions. Ask which trust form they use and whether they accept a deed drafted by your own solicitor. Ask how they confirm who the trustees and beneficiaries are, what happens if a named trustee dies before you do, and whether trustees or beneficiaries can be changed later without starting again.

Can you change the trustees or beneficiaries once a trust is set up?

Trustees can usually be added or removed by a further deed, so the people holding the policy on trust don't have to stay fixed forever. Beneficiaries are a different question, and how easily they can be changed depends on the type of trust used. This is one to check with your insurer or a solicitor at the point you set the trust up.

Do you need a solicitor to write a policy in trust?

Not always. For a straightforward family situation, an insurer's standard trust form is often enough on its own. Where the family is more complicated, such as children from an earlier relationship or an ex-partner still named somewhere in your paperwork, a solicitor can make sure the deed says what you actually mean. For a recommendation suited to your own circumstances, an FCA-authorised adviser or a solicitor is the right person to ask.

Who can you name as a trustee?

A trustee is simply someone you trust to hold the policy and pay out to the right people, and most insurers' standard forms let you name a spouse, another family member, or a friend. Many forms also let you name yourself as one of the trustees alongside them. The exact list of who qualifies, and how many trustees you need, is set out on the insurer's own form, so that's the one to check before you fill it in.