Fillable Printable Discretionary Trust declaration form

Discretionary Trust declaration form

Before you complete this form, we would recommend that you read our ‘Guide to Trusts’ and speak to a professional adviser. They will be able to

help you decide whether a trust is right for you and, if so, which type of trust would suit your needs best.

Terminal Illness Cover

You can choose to put the terminal illness beneﬁt into the trust or keep it as a retained beneﬁt. If you do put it into the trust, we will pay any beneﬁt for

terminal illness to the trust and not to you. The trustees would then distribute the beneﬁt according to the terms of the trust.

Once you, and the trustees that you choose, have signed this form:

• all beneﬁts payable under the Covers included in this form will be gifted to the beneﬁciaries;

• you will no longer be a beneﬁciary for the Covers included in this form;

• the trustees can only be changed in accordance with the terms of the trust;

• the trustees can retain assets until they think it is the right time for them to be distributed.

What is a discretionary trust?

A discretionary trust is a trust where the beneﬁciaries and their entitlements to the trust fund are not ﬁxed but are determined by the criteria set out by

the settlor in the trust instrument.

Putting an insurance plan, or parts of it, in trust is not right for everyone. Before completing this form, it is important to discuss your needs with your

ﬁnancial adviser or legal adviser.

Trusts and taxation

Normally, life protection policies that have been put in trust aren’t included in your estate - there should therefore be no inheritance tax to pay. It may

not be necessary, therefore, to register this trust with Her Majesty’s Revenue & Customs (HMRC). If this trust is part of a wider gifting programme,

there may be some beneﬁts to registering this trust with HMRC. Your adviser will be able to tell you if you should register your trust with HMRC.

The laws for gifts and trusts may change in the future. AIG Life Limited cannot be held responsible for any information given or any changes in tax

provisions or legislation that may affect the policies within the trusts or the tax treatment of either the policies or the provisions of the trust or the rules

applying to gifts for inheritance tax planning purposes.

What if I have a joint life cover?

You can use this form to put a joint life cover in trust, the details of both people whose lives are assured by the cover need to be included in the

Declaration of Trust section of this form. Note: please be aware that the life policy proceeds will be paid to the trustees upon the ﬁrst person’s death.

If this is not your wish, then putting your plan into trust may not be right for you and you will need to speak to your ﬁnancial adviser to discuss the

appropriate action that meets your needs.

Discretionary Trust declaration form

AIG - Discretionary Trust declaration form1

AIG - Discretionary Trust declaration form2

Section A: Deﬁnitions

The words in this form which begin with a capital letter have particular meanings which are set out in the table below.

WordDeﬁnition

Additional TrusteeThe person appointed by the Settlor to be a trustee of the Trust as listed in Section C - The Declaration

of Trust or such other person or persons who may be appointed as a trustee of the Trust.

Child/ChildrenA child that is a:

• Natural born child of the Settlor;

• Legally adopted child of the Settlor;

• Stepchild of the Settlor; or

• Illegitimate child of the Settlor.

Civil PartnerA person who has gone through a Civil Partnership Ceremony with the Settlor and is classiﬁed as their

partner under section 1(1) of the Civil Partnership Act 2004.

Excluded PersonA person speciﬁcally identiﬁed in Section C - The Declaration of Trust as excluded from being a Potential

Beneﬁciary.

MinorA person considered to be under the age of consent – currently age 18 in England and Wales, and age

16 in Scotland.

PolicyThe life assurance contract (or “cover”) that you are putting into this Trust and which is identiﬁed in Section

C - The Declaration of Trust.

Potential BeneﬁciaryA person who may receive a beneﬁt from this Trust and is listed as such in Section C - The Declaration

of Trust.

SettlorThe person who sets up the Trust and is identiﬁed as the “Settlor” in Section C - The Declaration of Trust.

TrustThe Trust that is set up pursuant to this Discretionary Trust Declaration Form incorporating this Section A -

Deﬁnitions, Section B - The Trust Provisions, Section C - The Declaration of Trust and any amendments to

these provisions.

TrusteesThe Settlor and the Additional Trustees.

Trust FundThe Policy, all the title, beneﬁts, rights and interest of the Policy, all monies received or payable under the

Policy and all property and monies added thereto by way of further settlement, accumulation of income

or otherwise.

Trust PeriodThe lifetime of the Trust which shall be up to 125 years.

Section B: The Trust Provisions

We have used headings to help you understand and ﬁnd particular clauses. These headings do not form part of the Trust Provisions and do not affect

their meaning.

References to people involved in setting up and running the Trust in the singular can mean one or more persons. So, for example, ‘Settlor’ can mean

one Settlor or the Settlors. If the reference is in the plural, it can also mean one person.

Wherever the Trust refers to an English legal term for any action or remedy, judicial proceeding or legal document, legal status, court ofﬁcial or any

legal concept and the Trust is subject to the jurisdiction of a country that is not England, then if the context requires, that English legal term shall be

construed to be the relevant legal term that most closely approximates it in the relevant legal system.

1 Declaration of Trust

The Settlor hereby assigns to the Trustees the Policy and hereby declares that the Trust Fund shall be held upon the

trusts and subject to the powers and provisions declared and contained in this Trust, except if the terminal illness beneﬁt is

retained as set out in Section C - The Declaration of Trust, any terminal illness beneﬁt payable under the Policy shall be for the

beneﬁt of the Settlor absolutely and shall not form part of the Trust Fund.

2 Discretionary power of appointment (power to change the Trust)

(a) Subject to the instruction for terminal illness beneﬁt referred to in clause 1 of the Trust Provisions, the Trustees shall hold the

income and capital of the Trust Fund upon trust for the beneﬁt of one or more of the Potential Beneﬁciaries at any time during

the Trust Period in the shares and on the terms as the Trustees shall in their absolute discretion appoint. All appointments shall

be by deed and may be stated to be revocable or irrevocable.

(b) The Trustees may at any time by deed extinguish or restrict any future changes of the discretionary power of appointment.

AIG - Discretionary Trust declaration form3

3 Payment of income and capital

(a) The income (if any) of the share of any Potential Beneﬁciary who is a Minor and is entitled to beneﬁt from this Trust shall

have his or her share of the proceeds and income (if any) held in trust on their behalf until such a time that they are no longer

a Minor.

(b) Where the Potential Beneﬁciary is a Minor, the Trustees may pay the full or part of the income of the monies held under trust

for the beneﬁt of the Minor in line with the Settlor’s wishes and for the beneﬁt of the Potential Beneﬁciary and in accordance

with clause 10 of these Trust Provisions. Such monies may only be used towards the maintenance, education or health of the

Potential Beneﬁciary who is a Minor. Section 32 of the Trustee Act 1925 shall apply to this trust as if the words “one half of”

were omitted from section 32(a)(1).

4 Settlor and Excluded Person unable to beneﬁt

No power or discretion conferred on the Trustees by this Trust or by law, either expressed or implied, may be exercised so as

to cause or permit any part of the capital or income of the Trust to become payable in any way for the beneﬁt of the Settlor or

any Excluded Person.

5 Irrevocability

This declaration of Trust shall be irrevocable.

6 Number of Trustees and power to appoint new Trustees

(a) There must be at least two Trustees appointed at any given time one of which must be a person who is not the Settlor.

(b) The Settlor shall be vested with the power to appoint new Trustees during his/her life or so long as the Settlor is able to

execute this power.

(c) The Settlor hereby appoints the Additional Trustees to act with the Settlor and in line with the powers conferred upon them in

this Trust. The Additional Trustees shall acknowledge their position and responsibilities bestowed on them by this Trust or any

subsequent revisions of the Trust.

7 Power to remove Trustees and retirement of Trustees

(a) The Settlor shall, for so long as she/he is able to execute this power, have the power to remove any Trustee without giving

reasons for doing so and without the need for other Trustees to agree or otherwise, provided there are at least two Trustees

remaining after the removal has been completed.

(b) A Trustee can be removed by the other Trustees where the Trustee who is being discharged of their duty cannot be found

provided that:

(i) none of the other Trustees have been in contact with the Trustee being discharged within the preceding twelve month period;

(ii) the other Trustees (one or more) have made reasonable efforts to make contact with the Trustee to be discharged; and

(iii) the discharge is made by deed executed by all of the continuing Trustees being at least two in number including at least

one who is not the Settlor and a declaration is made in such deed that all reasonable efforts were made to contact the

Trustee who cannot be found and that the continuing Trustees have written to the missing Trustee’s last known address without

success and that they have attempted to contact the missing Trustee through all other addresses given to them during their

investigation.

(c) A Trustee may retire provided that following the Trustee’s retirement, there are at least two continuing Trustees. A Trustee’s

retirement shall take effect from the date of the notice of retirement sent in writing to the continuing Trustees.

8 Power to invest

Where monies are held by the Trustees for a period of time until distribution of the proceeds is possible, the Trustees shall have

the power to invest such monies in an investment that will not be classiﬁed as a wasting asset and shall be easily accessible

to enable prompt distribution when appropriate. The Trustees shall be entitled to move such monies as appropriate in order to

make the investment.

9 Trust income

Any income accrued in relation to the Trust shall be paid or added to the Trust Fund for the beneﬁt of the Potential

Beneﬁciaries.

10 Distribution of assets

(a) All Trustees must approve any distribution made under the terms of this Trust to Potential Beneﬁciaries.

(b) The beneﬁts from the Trust Fund may be paid to a Potential Beneﬁciary, and where the Potential Beneﬁciary is a Minor, to the

parent, legal guardian or person with the legal capacity acting on behalf of the Minor who shall take receipt of the monies to

be held for the beneﬁt of the intended Potential Beneﬁciary who is a Minor and may provide a receipt in full discharge of the

Trustees’ duty.

(c) The beneﬁts from the Trust Fund may be paid to a treasurer or other person acting in an ofﬁcial capacity approved by the

charity which has been identiﬁed as the recipient of such beneﬁts.

(d) The Trustees shall make a full discharge of monies payable to such person(s) under any policy forming part of the Trust. The

Trustees shall pay the beneﬁts after deducting any reasonable charges outlined in clause 11 of these Trust Provisions.

AIG - Discretionary Trust declaration form4

11 Power to charge

(a) A Trustee but not the Settlor engaged in a profession or business shall be entitled to charge and be paid all professional

and other charges connected with their duty to act as Trustee and distribute the beneﬁts. This charge shall be no greater than

the Trustee’s normal professional charges and may include expenses incurred through administration, professional opinion

or peripheral expenses. Where a Trustee is not in a profession or business they shall be entitled to charge reasonable costs

incurred in carrying out their Trustee duties.

(b) A Trustee but not the Settlor shall be entitled to receive commission payments for professional and other services connected

with their duty to act as Trustee and distribute the beneﬁts. This charge shall be no greater than the Trustee’s normal

professional charges and may include expenses incurred through administration, professional opinion or peripheral

expenses. Where a Trustee is not in a profession or business they shall be entitled to receive reasonable commission

payments in carrying out their Trustee duties.

(c) A corporate body acting as Trustee shall be entitled to charge fees in accordance with their normal professional charges for

Trustee work. Such terms may be reviewed and agreed with the Settlor from time to time.

12 Power of appropriation

The Trustees may appropriate any part of the Trust Fund in or towards satisfaction of the interest of any Potential Beneﬁciary

and may for such purposes place such value on any property as they think ﬁt.

13 Power to add or exclude Potential Beneﬁciaries

The Trustees may add a class of persons to the list of Potential Beneﬁciaries and may add a person or class of persons to the

Excluded Person list provided that such addition was requested in writing by the Settlor.

14 Power to vary administrative provisions

The Trustees may amend or add to the administrative provisions of this Trust provided such amendment or addition is by deed.

15 Power to delegate

The Trustees may, by acting jointly, delegate any power conferred on them by this Trust to any person who provides

professional services in relation to the delegated power and such person shall exercise the delegated power on such terms

as they think ﬁt. The restrictions on delegation in sections 12 to 15 of the Trustee Act 2000 shall not apply.

(a) Subject to paragraph (b) below, the Trustees may lend all or any part or parts of the Trust Fund upon such terms as they

may in their absolute discretion consider to be appropriate, and on either a secured or an unsecured basis, to any Potential

Beneﬁciary or Potential Beneﬁciaries. Any such loan must be expressed to be repayable within the

Trust Period.

(b) The power referred to in paragraph (a) above shall only be exercisable where the Trustees comprise either a trust corporation

or at least two individuals of which at least one is neither the Settlor nor the Potential Beneﬁciary to whom a loan is proposed

to be made.

16 Liability for breach of Trust

The liability of a Trustee for breaches of the Trust shall be limited to breaches arising from the Trustee’s own fraud, wilful

misconduct or gross negligence except in the case of a Trustee acting in a professional capacity. The Trustees shall not be

liable for the default of a person acting under a delegated power pursuant to clause 15 of these Trust Provisions provided

they took reasonable care in the selection and supervision of such person.

17 No duty to consult

The Trustees may exercise their powers with absolute discretion and are under no duty to consult the Potential Beneﬁciaries or

accept instructions from any Potential Beneﬁciaries.

18 Law

This Trust shall be governed by and construed in accordance with the laws of England and Wales.

in the year of

Full name of policyholder

Full name of Trustee

Full name of policyholder

Full address of policyholder

Full address of Trustee

Full address of policyholder

day of

Signature of Trustee

Postcode

This declaration of trust is made on the

between

for

and

1st policyholder

Cover reference

Cover type

1st additional Trustee

2nd additional Trustee

3rd additional Trustee

4th additional Trustee

2nd policyholder

(for joint life policies)

Section C: The Declaration of Trust

P–

AIG - Discretionary Trust declaration form5

Potential Beneﬁciaries

AIG - Discretionary Trust declaration form6

Full address of Potential Beneﬁciary

Full name of Potential Beneﬁciary

Postcode

Full address of Potential Beneﬁciary

Full name of Potential Beneﬁciary

Postcode

Full address of Potential Beneﬁciary

Full name of Potential Beneﬁciary

Postcode

Full address of Potential Beneﬁciary

Full name of Potential Beneﬁciary

Postcode

Terminal illness beneﬁt to be:

Retained by the Settlor, or

Gifted to the Trust

(mark as appropriate)

The Trustees may select anyone in the list below to receive beneﬁts from the Trust

1. Any widow, widower of the Settlor;

2. Any surviving Civil Partner of the Settlor immediately prior to the death of the life assured (providing they are not also a Settlor);

3. Any Children and any other direct descendents of the Settlor or Settlor(s);

4. The parents, brothers, sisters of the Settlor(s) and the Children of any other direct descendents of these persons;

5. Any person(s) entitled under the will or intestacy of the Settlor(s);

6. Any person(s) or charity other than the Settlor(s) nominated as a beneﬁciary by the Settlor(s) by notice in writing to the Trustees; or

7. Any other person named below:

Excluded Beneﬁciaries:

The following persons shall be excluded from being a Potential Beneﬁciary notwithstanding any other provision of this Trust:

Full address of Excluded Beneﬁciary

Full name of Excluded Beneﬁciary

Postcode

Full address of Excluded Beneﬁciary

Full name of Excluded Beneﬁciary

Postcode

Full address of Excluded Beneﬁciary

Full name of Excluded Beneﬁciary

Postcode

1st additional Trustee

2nd additional Trustee

I, the above named Trustee, acknowledge and accept the appointment as Trustee

Independent witness

Address

Signature of Trustee

Signature of Witness

Full name

Postcode

Date

Signed as a deed by the Trustees:-

AIG - Discretionary Trust declaration form7

Execution of Trust

THE SETTLOR SHOULD ENSURE HE/SHE HAS CAREFULLY READ THIS DISCRETIONARY TRUST DECLARATION FORM AND HAS TAKEN

INDEPENDENT PROFESSIONAL ADVICE ON THE SUITABILITY AND TERMS OF THIS TRUST

1st Settlor

2nd Settlor

Independent witness

Address

Signature of the Settlor

Signature of Witness

Full name

Postcode

Date

Signed as a deed by the Settlor(s):-

To be used where a Trustee is a company

The above named Trustee acknowledges and accepts the appointment as Trustee.

Signed as a deed for and on behalf of:-

Name of Trustee company

Signature of Director

Signature of Director/Secretary

Date

Appointment of a company as a Trustee

3rd additional Trustee

4th additional Trustee

I, the above named Trustee, acknowledge and accept the appointment as Trustee

Independent witness

Address

Signature of Trustee

Signature of Witness

Full name

Postcode

Date

AIG Life Limited. Telephone 0845 600 6820. Registered in England and Wales. Number 6367921. Registered address: The AIG Building, 58 Fenchurch Street, London EC3M 4AB.

AIG Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The registration number is 473752.

EDCO0856-0315