Life Insurance Trusts in Cork — Keeping Life Cover Outside Your Estate

A life insurance policy written in trust means that when you die, the policy proceeds are paid directly to your chosen beneficiaries — outside your estate, without going through probate, and potentially free of inheritance tax. For many Cork families, a life insurance trust is one of the most practical estate planning tools available.

Why Write Life Insurance in Trust?

Without a trust, your life insurance proceeds form part of your estate on death. This means:

• The proceeds must go through probate before being paid to beneficiaries — a delay of 9–18 months
• The proceeds may be subject to CAT in the hands of beneficiaries (depending on amount and relationship)
• The proceeds are available to creditors of the estate

Written in trust, the proceeds bypass all of these issues: they are paid directly to the trustees for the beneficiaries, typically within days or weeks of the death.

How a Life Insurance Trust Works

1. You take out a life insurance policy
2. Instead of naming beneficiaries directly, you write the policy in trust, naming trustees
3. The trustees hold the policy and, on your death, receive the insurance proceeds
4. The trustees distribute to the beneficiaries according to the trust terms

Because the policy is owned by the trust (not you personally), the proceeds are not part of your estate.

CAT and Life Insurance Trusts

Ordinarily, a life insurance payout to a beneficiary is subject to CAT if it exceeds their threshold. However, a specifically structured life insurance trust — such as a Section 72 policy — can pay out completely free of CAT, specifically to fund the beneficiary's CAT bill on the rest of the estate.

Types of Life Insurance Trust

• Absolute trust: Fixed beneficiaries named; their interest is certain and cannot be changed. Simple, but inflexible.
• Discretionary trust: Trustees have discretion over distribution. More flexible, but subject to discretionary trust tax as described in our Discretionary Trust guide.
• Section 72 trust: Specifically designed to pay a CAT bill tax-free — see our Section 72 Policy guide.

Who Can Benefit from a Life Insurance Trust in Cork?

• Parents with adult children who are likely to inherit above the Group A threshold
• Business owners wanting to ensure family income during the probate period
• Partners (married or not) who want immediate access to funds without waiting for probate
• Anyone who wants to ensure a specific financial provision outside their estate

Setting Up a Life Insurance Trust in Cork

Talk to your Cork estate planning solicitor and financial adviser together — they work as a team to structure the trust correctly, ensure the policy meets your needs, and align the trust with your overall estate plan. See: Estate Planning Cork.