Discretionary trust
We've designed the discretionary trust to be a flexible trust solution for all personal protection policies. The trust is designed to keep life cover in trust while allowing customers to retain other benefits. However, it has flexibility built in so if this isn't right for your clients, you can adapt it to suit their needs.
The trust splits any benefits from your clients' protection into three categories:
- Gifted benefits – these include Life and Terminal Illness and are always given to the trustees to pass on to the beneficiaries.
- Retained benefits – these include Critical Illness and Total Permanent Disability. Most customers prefer these benefits to be kept for themselves so the trust does this automatically. However, if for any reason your client wishes these benefits to be passed to the trustees too, then they can choose to do so.
- Personal benefits – these include payments for Income Protection, Children's Critical Illness Cover, Accident Hospitalisation, Fracture Cover, and any other benefit the plan may provide. These are always paid straight to your client.
Joint plans
The discretionary trust is designed to work for both single and jointly owned plans. Where plans are jointly owned the trust will automatically keep any benefits from Life or Terminal Illness cover for the survivor. There will be situations when your clients don't want the survivor to benefit, for example, joint life second death. So, the trust has the flexibility for your clients to opt out of the survivorship clause and instead have the benefits paid directly to the trustees.
Our signature free process
We know processing a trust application can be a struggle. To simplify the application, our signature free trust process allows you to complete the application for your client without having to wait for signatures.
Get our literature
- Discretionary trust form (PDF)
- Draft trust request form (PDF)
Important note:
Please note this is a guide and shouldn’t be relied on as actual advice.