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Trusts for London homeowners —protect what matters most

A trust ensures your assets pass to the right people, quickly and tax-efficiently. From writing your life insurance in trust to protecting your family home — here is everything you need to know.

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What is a trust?

A trust is a legal arrangement where one person (the settlor) transfers assets to a group of people (the trustees) to hold and manage for the benefit of named individuals (the beneficiaries). The settlor sets out the rules of the trust in a trust deed — and the trustees are legally bound to act in accordance with those rules.

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The Settlor

You — the person who creates the trust and places assets into it (e.g. a life insurance policy or property).

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The Trustees

The people who legally hold and manage the trust assets — typically a spouse and a trusted friend or family member.

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The Beneficiaries

The people who will benefit from the trust — your spouse, children, or other named individuals.

Why trusts matter for homeowners

Bypass probate: Assets held in trust do not form part of your estate and do not need to go through probate — meaning your family receives them quickly rather than waiting 6–12+ months.
Reduce inheritance tax exposure: Assets in trust are generally not counted as part of your estate for IHT purposes, potentially saving your family 40% tax on assets above the nil rate band.
Faster access for your family: A life insurance policy in trust can pay out in days or weeks. Without a trust, the same policy might take over a year to pay out while your family waits for probate.

Types of trust relevant to UK homeowners

Different trust types suit different needs — here is a plain-English overview.

Most common for life cover

Bare Trust

The simplest type of trust. Assets pass directly to named beneficiaries who have an absolute right to them. Commonly used for life insurance policies where beneficiaries are clearly identified and will not change.

Most flexible

Discretionary Trust

Trustees decide how and when to distribute assets to a class of beneficiaries. Flexible for changing family circumstances — useful where young children or blended families are involved.

Fixed & certain

Absolute Trust

Similar to a bare trust — fixed beneficiaries with an absolute entitlement. Once established, it cannot be changed. Often used for life insurance where beneficiaries are certain and fixed.

For property income

Interest in Possession Trust

A beneficiary receives the income or benefit from an asset during their lifetime (for example, the right to live in a property), while the underlying capital passes to others on their death.

Multiple policies

Pilot Trust

A small, nominally-funded trust set up to receive future assets — typically multiple life insurance policies. Useful for people with several policies who want them all held under one trust arrangement.

Property — solicitor required

Family Protection Trust

Holds the family home or other property for a surviving spouse and/or children. Provides protection from care fees, sideways disinheritance, and creditors. Requires a specialist solicitor to set up.

Within our scope to advise

Life insurance in trust

Writing your life insurance in trust is the single most important step most London homeowners miss. It is free, takes around 30 minutes, and can save your family months of waiting and tens of thousands in inheritance tax. We set this up as part of every life insurance application we arrange.

What happens without a trust

Without a trust, your life insurance payout becomes part of your estate on death. This means:

Your family cannot access the money until probate is granted — typically 6–12 months
The payout is added to your estate and counts toward the inheritance tax calculation
If the total estate exceeds the nil rate band (£325,000 or £500,000 with RNRB), tax is due at 40%
A £500k London property plus £400k life insurance = £900k estate — potentially £150,000+ in IHT

What happens with a trust

The payout goes directly to your named trustees within days or weeks of a valid claim
The money does not form part of your estate — no probate required
No inheritance tax on the life insurance payout
Your family can use the money immediately to clear the mortgage and cover living costs

Worked example: £500,000 life insurance policy

Without a trust

Family home worth £700,000 + £500,000 life insurance = £1,200,000 estate. After £500,000 nil rate band (including RNRB), there is £700,000 subject to IHT. Tax bill: £280,000. Family also waits 6–12 months for probate.

With a trust

The £500,000 policy pays directly to trustees within weeks. It does not form part of the estate. Family home alone: £700,000 estate, IHT on £200,000 above the nil rate band = £80,000 saved in tax. Family gets the full £500,000 quickly.

We set this up as standard — at no extra charge

We arrange for every life insurance policy to be written in trust as part of our standard service. It adds 30 minutes to the process and costs nothing. It is one of the most impactful things we do for our clients.

Solicitor required — we can refer you

Property trusts

A property trust holds your home or investment property for specified beneficiaries. This is a powerful estate planning tool for London homeowners — but it requires a specialist solicitor or estate planning adviser to set up correctly.

Family Protection Trust

The most common property trust for families. The family home is held in trust for children, while a surviving spouse retains the right to live there. This protects the property from being used to fund care home fees, from passing to a new partner if the surviving spouse remarries, and from sideways disinheritance in blended families.

Protective Property Trust

Often set up within a will, this separates a property into two equal shares. When the first spouse dies, their share passes into trust rather than outright to the survivor — protecting it for the children.

Cohabiting couples

Unmarried partners do not have the same inheritance rights as spouses. A property trust — alongside professionally drafted wills — is essential for cohabiting couples who own property together and want to protect each other and any children.

Important: property trust advice requires a solicitor

Trust advice for property and estate planning must come from a qualified solicitor or estate planning specialist. Mortgage International can advise on writing life insurance policies in trust, but for property trusts, wills, and estate planning we refer clients to trusted specialist solicitors. Please contact us and we will point you in the right direction.

Leaving assets in trust for children

Children under 18 cannot legally own significant assets in their own name. Trusts provide the mechanism for assets to be held and managed until children are old enough to receive them.

Bare trusts for children under 18

A bare trust holds assets for a child until they reach 18, at which point the child has an absolute right to the assets. Simple and commonly used for savings, investments, and life insurance payouts for children.

Age-restricted discretionary trusts in wills

Many parents set up discretionary trusts within their wills that hold assets until children reach a specified age — commonly 21, 25, or even 30. Trustees manage the assets in the meantime and can make distributions for education, welfare, or housing. This requires a professionally drafted will.

Life insurance in trust for children

Writing your life insurance in a discretionary trust with your children as potential beneficiaries ensures a payout can reach them quickly through trustees — without waiting for probate or the child reaching 18.

Pension nominations

While not technically a trust, nominating beneficiaries for your pension fund operates similarly — pensions typically sit outside your estate and pass to nominated individuals without probate. Keeping your pension nomination up to date is as important as writing your life insurance in trust.

Trusts FAQs

Does life insurance have to go through probate?

Not if it is written in trust. A life insurance policy that is not in trust forms part of your estate and must go through probate before the money can be released — a process that typically takes 6–12 months and can be longer in complex estates. Writing your policy in trust means the payout goes directly to your named beneficiaries, bypassing probate entirely.

How do I write my life insurance in trust?

Writing your life insurance in trust is a straightforward process that takes around 30 minutes and is completely free. At the point of application, you choose a trust type (usually absolute or discretionary), name your trustees — typically your spouse and one other trusted adult — and name your beneficiaries. We handle this as standard on every life insurance policy we arrange.

What is the difference between an absolute trust and a discretionary trust?

An absolute trust (also called a bare trust) names fixed beneficiaries whose entitlement cannot be changed after the trust is set up. It is simple and certain, but inflexible. A discretionary trust gives trustees the power to decide how and when to distribute the money — useful if your family circumstances may change, or if beneficiaries are young children whose needs are unknown. We will advise which is right for your situation.

Can I change my life insurance trust after setting it up?

It depends on the trust type. An absolute trust is irrevocable — once set up, the beneficiaries are fixed and cannot be changed. A discretionary trust is more flexible — while the trust itself is established, the trustees have discretion over how and when to distribute, and some discretionary trusts allow beneficiaries to be added or changed. Always review your trust when your family circumstances change.

Does putting life insurance in trust save inheritance tax?

Yes, in most cases. A life insurance payout that goes through your estate is counted toward the total estate value for inheritance tax purposes. If your estate exceeds the nil rate band (£325,000, or up to £500,000 with the residence nil rate band), the excess is taxed at 40%. Writing your policy in trust means the payout goes directly to beneficiaries and is not counted as part of your estate — potentially saving your family tens of thousands of pounds.

How long does a life insurance trust payout take?

A policy written in trust can typically pay out within days or weeks of a valid claim being submitted — the insurer pays the trustees directly and they distribute to beneficiaries. Without a trust, the payout must wait for probate to be granted, which typically takes 6–12 months and can take longer if the estate is complex.

Who should be the trustee of my life insurance?

Most people appoint two trustees: a spouse or partner, and a trusted friend or family member. A professional trustee (such as a solicitor) can also be appointed but is not usually necessary for a straightforward life insurance trust. Choose someone you trust completely, who understands your wishes, and who is likely to outlive you. We will talk you through trustee selection as part of the trust setup process.

Can I put a joint life insurance policy in trust?

Yes. Joint life insurance policies can be written in trust, but the structure can be slightly more complex as the policy pays out on the first death. We will advise on the most appropriate trust type for a joint policy and ensure the trust deed is correctly set up to reflect your wishes as a couple.

Related protection services

Life Cover →

Term life insurance for your mortgage and family — policies written in trust as standard.

Critical Illness Cover →

Tax-free lump sum on diagnosis of cancer, heart attack, stroke, or other serious illness.

Mortgage Protection →

Overview of all protection products — life, critical illness, income, and MPPI.

Income Protection →

Replace up to 70% of your salary if illness or injury stops you working.

Set up your life insurance in trust today

It takes 30 minutes and is completely free. We handle it as part of every life insurance application we arrange.

Serving all of Greater London and surrounding areas.

Get a Free Quote Call 0844 884 9748

Trust advice for property and estate planning should be sought from a qualified solicitor or estate planning specialist. Mortgage International can advise on writing life insurance policies in trust. Mortgage International is an appointed representative of The Right Mortgage Limited, which is authorised and regulated by the Financial Conduct Authority (FCA Ref: 478810). Trusts are not regulated by the Financial Conduct Authority.