On the whole, Phil Jeynes, head of account development at PruProtect, says protection policies should always be placed in trust.
He says it is free - and very simple - to do and ensures that the proceeds from a plan go directly to the people the policyholder intended. Mr Jeynes says this gives great peace of mind, particularly where fractious family circumstances are a concern.
There would be very limited circumstances where placing a policy in some sort of trust would not be appropriate, agrees Matt Forman, head of protection propositions for Aviva - regardless of whether someone is single, married or divorced.
Mr Forman says if the protection need is to cover a specific liability then the beneficiary, or someone acting on their behalf, for example parent on behalf of a child, could maintain some control over the policy and ensure the proceeds are paid in accordance with the trust provision.
Using trusts is a way of ensuring that second spouses/families can be excluded from benefitting from the life cover, according to Mike Allison, head of protection at Paradigm Protect.
If trusts aren’t used then Mr Allison says any life cover will form part of the deceased’s estate and will be distributed in line with their will/intestacy.
If both former partners still trust each other, then Emma Thomson, life office relationship director of LifeSearch, says a trust arrangement will be fine.
But she warns if there is any worry that the partner who provides the maintenance payments might change a trust later down the line to benefit other people, for example his or her new family, then a ‘life of another’ arrangement will be better as it cannot be altered by the life assured.
