Lucy: ‘Oh I’d love to be your trustee. It would be an honour. What time shall I come over?’
Sarah: ‘Well Catherine and Sally are getting here for about 2.30 and don’t forget to bring cake!’
2.30 arrives, pleasantries are dispensed and the ladies sit down to talk shop:
Sarah: ‘OK, so Simon and I are in the process of getting our life insurance up to date since we took out a bigger mortgage for the extension and our adviser has talked to us about putting the policy in ‘trust’
Catherine: ‘Is that like setting up a trust fund for the children?’
Sarah: ‘well sort of because the money goes where you want it to go. Let me go through my notes…
OK, it’s free to do this…’
Catherine, Sally & Lucy: ‘ Ooooh!’
Sarah: ‘Yes, I was suprised to hear that too’
Lucy: ‘What does it do?’
Sarah: ‘Well let’s see… All of your worldly possessions make up your ‘estate’ and that includes your debts too and your life insurance policies.
When you die this estate needs to be sorted out and any money or possessions you have gets used to clear any debts and then the rest goes to your ‘next of kin’…’
Catherine, Sally & Lucy: ‘ Aaaah!’
Sarah: ‘But…..wait…. That process of sorting out the estate can take months or even years so even though we have life insurance it could take weeks, months or even years before the money gets paid over to the right people.
Sally: ‘But if Simon died how would you pay for the house and the bills, let alone feeding the kids if you had to wait that long? I couldn’t do it if John died. We’d lose the house!’
Sarah: ‘That’s exactly why my adviser said there’s actually not a lot of point having a policy if you don’t put it in trust.
The trust means the life insurance policy is not considered part of our estate so it doesn’t get tied up in ‘probate’ and instead it would get paid straight away to the right people’
Lucy: ‘Why haven’t I heard about this? Where did you go for advice? We got our insurance online.’
Sarah: ‘Oh our mortgage adviser is very good and he says he always recommends insurance and trusts and any adviser that doesn’t isn’t giving their customer a good enough service.
I’d never buy my life insurance online now I’ve had proper advice.’
Catherine: ‘You’ve got me thinking now. You must give me your adviser’s details’
Sally & Lucy: ‘Yes, us too…’
Sarah: ‘I will but before I do and before we tuck into that cake let me just go through why I wanted you all here…’
Catherine, Sally & Lucy: ‘ Oh go on, but be quick!’
Sarah: ‘OK, Lucy & Sally, I need you to be my ‘trustees’. I’ve known you both since we started school and you were my bridesmaids at both weddings and there’s no-one I trust more to make sure the money from the policy gets paid to the right people.
Lucy: ‘Oh I see, we’re ‘trustees’ because you trust us..?’
Sarah: ‘Yes, that’s right. And Catherine, I need you to be my witness and sign the forms to make them legal’
Catherine: ‘Oh, OK, I can do that. No problem!’
Sally: ‘So you kind of explained on the phone but what will I have to do?’
Sarah: ‘Well I need to write a ‘letter of wishes’ which explains who I want the money to go to from my life insurance policy and how much I want each of them to get and you just need to make sure that gets done by overseeing things’
Lucy: ‘You told me that because we’re on the form, the insurance company will contact us if there is a claim and we just work with them to make sure they go by that ‘letter of wishes’ thing’
Sarah: ‘That’s it, I mean the trust form explains most of what happens to the money but the letter reinforces it’
Lucy: ‘And what do we have to do today?’
Sarah: ‘Today all you need to do is sign the form. I’ve already filled in the rest of your details, in fact, that’s all any of you need to do because I’ve filled in your names and addresses but Catherine I wasn’t sure of your date of birth?’
Catherine: ‘OK, I can fill that bit in and then all I have to do is sign it too?’
Sarah: ‘Yep, that’s it and it’s all done’
Sally: ‘That was easy’
Sarah: ‘I know, and now I know it’s taken care of, how about that cake…?’
Catherine, Sally & Lucy: ‘Yes please!’