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Phil Thomas
Senior Technical Support Consultant

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Beneficiary nomination or trust? A practical guide for advisers

Published  02 October 2026
   3 min read

As you know, each client's situation is different and whether they go down the beneficiary nomination or trust journey depends on individual circumstances.

The following table will help with the conversation.

 

Beneficiary Nomination 

Trust 
What plans are they available for?
 Single own Personal Menu Plan that includes Life Cover as part of the application process. Single own life, joint life first death and joint life second death Personal Menu Plans, either as part of the application process or for in force plans.
How does the process work?
 Clients can nominate up to five beneficiaries as part of our application process – no extra form needs to be completed. You’ll need to complete a trust form. You can use our guides or speak to your Royal London contact if you have any questions.
How long does it take for the benefits to be paid out?
 On death any benefit is paid to the nominated beneficiary(ies) without waiting for probate.

On death any benefit is paid to the surviving trustees without waiting for probate.
What level of flexibility does each
option offer?

Clients can update or change their nominated beneficiaries at any time.

If the plan includes more than one cover, your clients can nominate different beneficiaries for each cover.

Each year we’ll remind clients that they can review and change their beneficiaries.

Flexibility depends on the type of trust.

With an absolute trust, clients can’t change their beneficiary(ies).

With a discretionary trust clients can tell the trustees of any changes, but the ultimate decision on who receives the proceeds rests with the your trustees.
What happens if circumstances
change?
 It’s important that clients update their beneficiary nomination as soon as a named beneficiary is no longer appropriate. There’s no discretion for anyone to change the nomination after their death.

Trustees manage the death benefit for the beneficiary(ies), so it’s important to change a trustee who’s no longer suitable.

Under a discretionary trust, even though trustees decide which beneficiaries receive any benefits, clients should keep their trustees
updated of any changes in circumstances
Who makes decisions about the death benefits?

During their lifetime, clients control who will receive the death benefits. On death, the nominated beneficiary(ies) can deal with the benefits as they wish.

If a nominated beneficiary is a minor, their parent/legal guardian will manage the payout until their 18th birthday.

By using a discretionary trust, when the client dies the trustees can control which beneficiaries receive the proceeds and when.

With an absolute trust, the trustees have no discretion over who can benefit, or when. But if the beneficiary is a child the trustees are
responsible for managing the proceeds until the child’s 18th birthday.
How does each option affect ownership of the plan?
 Beneficiaries are only entitled to the death benefits. This means they’re not owners of the plan, so clients don’t need to get their agreement if they need to make changes to the plan.

All trustees (normally including the client) become the legal owners of the plan. In certain circumstances their agreement may be required to make changes to the plan.
How is inheritance tax (IHT) treated for each option?

In the event of death, the benefit is paid to the nominated beneficiary(ies) instead of the plan owner’s estate, so isn’t included in it for IHT purposes.

Any terminal illness claim would be paid to the plan owner, and if not spent before death would form part of the taxable estate.

 With our trusts, both the death and terminal illness benefit don’t form part of the taxable estate for IHT.

Disclaimer

The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.

All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.