Transfer of an existing Life policy into a trust
Written by Charlie Palmer on 10/08/2018

How to value the transfer

When an existing life assurance policy is transferred to a trust for no consideration the IFA needs to take check. Invariably this will be during the lifetime of the settlor and the value of the transfer will be measured by reference to the premiums paid to date or to the market value (usually the surrender value), whichever is greater. 

For term assurances the value of the transfer is measured by reference to the market value.   Obviously this is nil in most cases, but where the transfer is made on death then it is the sum assured, and if at serious ill health transfers will mean a deal needs to be done with HMRC. 

In practice, if death from serious illness occurs within two years of such a transfer then you can expect an enquiry and an assessment.  There are also special rules for valuing unit-linked policies.

Cheltenham Office 01242 80 70 10 

max.durrant@ifac.eu

One minute video introduction see link here

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