Life Insurance & Trustee

[HillyBilly]

Back in 1971 my Mum took out a whole of life insurance policy. Its initial purpose was to pay out a lump sum to me in the event of her death and to provide me with an annual income until I reached the age of 21. (She was a single parent so wanted to ensure I wasn't left destitute!). In 1986, when I turned 21, it became simply a life insurance policy, to be paid out on her death.

Because I was a minor when the policy was taken out, Mum had to appoint a trustee named on the policy who would administer the funds in the event of Mum's death. The trustee was a friend of hers at the time.

The monthly premiums have been paid by Mum from 1971 until her death in June. I recently sent off Mum's will (I am her only beneficiary and executor), the original of the policy and the death certificate to the insurance company for settlement of the policy (I assumed). Not so! The insurance company have written back advising that they will only pay out to the named trustee and have provided me with a form for said trustee to sign and have witnessed. Said trustee is, I imagine long dead as she was older than Mum. They didn't even stay in touch beyond the 70's.

Maybe a salutary warning to anyone who might find themselves in a similar situation. I'm guessing that in 1986, the trustee should have been formally removed from the policy?

 

[Kevinl]

Surely the trust was dissolved when you hit 21 and the policy became a simple insurance policy, I'd query this with the company, it may just be that you've spoken to on of their "lesser trained" employees. Once the trust ended then your mother or her estate became the beneficiary as I understand it.
K

 

[HillyBilly]

There is nothing written in the original policy about the trust automatically ending when I turned 21. Mum's own handwritten notes (she was quite meticulous over money matters!) state that in 1986 it became a "normal" life insurance policy, payable on death, with slightly lower premiums (confirmed at the time by the insurance company). I will re-read it all tomorrow. Thanks Kevin.

 

[HillyBilly]

Having again read the original policy today, there is nothing in the wording to say that the trusteeship had a time limit of the 15 years it took from its commencement until I "came of age".

There were two trustees (Mum, now deceased) and a friend of hers, with me as the beneficiary.

So does/can a trust "automatically" dissolve? Just because I (the beneficiary) am no longer classed as a minor?

Or is the insurance company correct in stating that they can only pay out Mum's life insurance to the other named trustee? I fear they are.

 

[marionq]

Having again read the original policy today, there is nothing in the wording to say that the trusteeship had a time limit of the 15 years it took from its commencement until I "came of age".

There were two trustees (Mum, now deceased) and a friend of hers, with me as the beneficiary.

So does/can a trust "automatically" dissolve? Just because I (the beneficiary) am no longer classed as a minor?

Or is the insurance company correct in stating that they can only pay out Mum's life insurance to the other named trustee? I fear they are.

I would refer this to the Finance Ombudsman if you don’t get satisfaction. Write again to the ins co telling them you are going to do that and see if they will save themselves the bother of getting a sharp letter. I had a satisfactory outcome a few years ago when I had to
Involve them in an insurance matter.

 

[LadyA]

Definitely, don't let it go, HB! Your mum faithfully paid her premiums all those years in order that you would benefit from it - NOT so that a greedy corporation could just pocket her money, and then wriggle out of paying out on the policy!

 

[Sam Luvit]

I found this in the T&C for discretionary trusts with L&G, not sure if that helps

If a trustee dies, the remaining trustees can still carry on with the role, but a replacement could be appointed. If the trustee was the last surviving trustee, their legal personal representatives will have the power to appoint additional trustees or take over as trustees themselves.

 

[HillyBilly]

The insurance co. have now said that if I formally indemnify them against all claims or demands that may be made on them (by the other trustee) they will "consider" my claim as executor and beneficiary. And they are only doing this because it's such a small sum of money

 

[LadyA]

if I formally indemnify them against all claims or demands that may be made on them (by the other trustee)

It being close to Halloween, and all?!

 

[Sam Luvit]

The insurance co. have now said that if I formally indemnify them against all claims or demands that may be made on them (by the other trustee) they will "consider" my claim as executor and beneficiary. And they are only doing this because it's such a small sum of money

Can't find any polite words tonight so

 

[HillyBilly]

Can't find any polite words tonight so

 

[Sam Luvit]

Exactly

 

[MartinWL]

I suggest that it would be useful if you could confirm that the other trustee, is now dead, if she could conceivably still be alive. That would help to clarify things.

Search probate records for documents and wills (England and Wales)

Search online for a will, grant of representation or probate document for a death in or after 1858

www.gov.uk

The link lets you find wills and probate records and if you were in a position to prove that all trustees are deceased it might solve a few practical problems.

 

[Izzy]

Just a note to say that this in an old thread (2017) and the original poster hasn’t been on line for some time.