Protection providers and industry commentators often extol the benefits of placing plans in trust.
The advantages for clients are widely recognised and numerous – inheritance tax mitigation, avoiding probate delay, controlling claim proceeds, and so the long, familiar list continues.
Yet, dismissed as unnecessary form-filling, or simply viewed as irrelevant in the context of a mortgage sale, less than 5 per cent of our personal protection plans are written in trust.
Many providers are committed to making the trusts process as straightforward as possible for adviser and client alike, by simplifying trust forms wherever possible and producing easy to follow guidance literature.
Nevertheless, placing a plan in trust will always involve a little more effort on the part of the adviser than not doing so.
But there is a growing trend for providers to make this process even easier with the use of online trusts. Several providers offer this in slightly different guises but this is generally in the form of a trust request rather than a formal deed.
This involves the customer making a declaration to their adviser that they want their policy to be written under trust.
The adviser then completes the details of any trustees and/or beneficiaries online and submits the form to the insurance company.
Once complete copies will be sent to the client and their trustees and no signatures are generally required.
The main drawback is that this process is only available for new applications and must be completed before the policy starts in order for the trust to be valid.
You’re also never quite sure whether the trustees have accepted their appointment and are willing to act when the time comes.
But wouldn’t it be good if online trusts could be offered for existing plans as well. Well the truth is they can, as long as an appropriate process is used.
Royal London is looking for your feedback on our facility for our most frequently used trusts. Other trusts and the deeds used to amend them will follow in due course to allow you to make the most of the trusts we have available.
The process is a little more involved than a trust request and just like a paper form requires a signature from each of the client, a witness and the trustees in order for a valid deed to be created.
But by using electronic signatures the time taken and effort needed to complete the form can be significantly reduced in comparison to a paper form.
As long as you have up-to-date email addresses and mobile numbers for each client and their trustees, the process allows all parties to sign within minutes of each other, even if they are hundreds of miles apart, and removes the risk of delays or the form getting ‘lost in the post’.
