Category: Specific protection products · Reviewed by Matt Bartlett, Director · Founder · Last reviewed 2026-06-10
A trust written whole of life policy is a WoL policy where the legal ownership is vested in trustees under a discretionary trust. Writing the policy in trust achieves two essential purposes: (i) the policy proceeds fall outside the deceased’s estate for inheritance tax purposes, and (ii) the trustees can pay the proceeds promptly to the chosen beneficiaries without waiting for grant of probate. Trust drafting must be considered carefully to avoid unintended IHT consequences.
Category: Specific protection products Also known as: WoL in trust, trust WoL Trust type: Discretionary (typically) Related concepts: Whole of life cover, Increasing whole of life, Inheritance tax cover, Joint life second death
The trust is normally a flexible discretionary trust drafted to qualify as a “settlement” for IHT purposes but to attract minimal relevant property periodic and exit charges because the trust has no value during the lifetime of the insured (only the right to receive policy proceeds on death). On payment of proceeds and prompt distribution to beneficiaries, no exit charge typically arises.
FCA regulated under ICOBS (the policy); the trust governed by English (or Scots) trust law and the Inheritance Tax Act 1984 (Part 3, Chapter 3 — relevant property trusts). Most life insurers offer standard form trust deeds. HMRC’s Inheritance Tax Manual IHTM44000 provides guidance on policy trusts.
Trust written WoL is the standard structure for IHT mitigation. The trust must be drafted to deal correctly with the policyholder’s intentions including who the beneficiaries are, who the trustees are, whether the settlor (often the insured) is excluded from benefit, and the powers and duties of the trustees.
A 70-year-old takes out a £400,000 JLSD WoL policy with her spouse, written in trust for their three children. The trustees are the couple and their elder son. Premiums (within the normal expenditure exemption) are paid by the couple. On the second death, the £400,000 is paid to the trust and distributed to the children within months — providing liquidity to pay the estate’s IHT bill.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-10. Next review: 2026-12-10.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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