GRA Blogs

Articles by Matthew Gilligan

CAN YOU PUT YOUR INSURANCE POLICIES IN YOUR TRUST?

AUTHOR: Matthew Gilligan

POSTED: 12 November 2013

A common issue that arises is dealing with insurance companies over the names on insurance policies. Technically, insurance should held in the name of the owners of a property.

In the case of a trust, the legal owner on the title of a property is the trustee/s (while the beneficial owner is the beneficiaries). Clients tend to say “ the owner is the trust”, for example the “Smith Family Trust”. Assuming the trustees are Mary & John Smith and an independent trustee called XYZ Trustee Limited, the better description is “Mary Smith, John Smith and XYZ Trustees Limited as Trustees of the Smith Family Trust”. That's a bit wordy, so alternatively the shorter version of “Mary Smith, John Smith and XYZ Trustees Limited” will legally suffice.

A minute referring to the existence of the insurance policy or life policy in such circumstances, prepared and signed by the trustees, is prudent.

Watch for this issue to arise when dealing with life insurance companies particularly, as they will incorrectly say that trusts cannot own life insurance policies (and tell you to put the policies in the individuals' names). Literally they are correct - a trust cannot own a policy as it is not a separate legal entity.

However, the trustees can jointly own a life insurance policy and we have many thousands of our clients' life insurance policies held in trustees' names in this fashion. This can be better as it shelters the life policy from creditors' claims in the event an insolvent estate is attacked by creditors.

In summary, if insuring trust assets or writing life policies in a trust's name, write the insurance in the name of the trustees and you should have no issue.

If you would like further help with this please contact us on +64 9 522 7955, [email protected] or via our website.

Request a Meeting

Matthew Gilligan
Managing Director and Property Services Partner

09 522-7955

[email protected]

© Gilligan Rowe & Associates LP

Did you like this article? Subscribe to our newsletter to receive tips, updates and useful information to help you protect your assets and grow your net worth. We're expert accountants providing expert advice to clients in NZ and around the world.

Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.

Comments

Testimonials

I attended the GRA function last night - it was excellent, and goodness your knowledge is like an encyclopaedia! Phenomenal. We have already had an initial free consult with John Rowe, have attended one of Matthew's info evenings, and are already booked for Property School. I've read Tax Structures and am reading Property 101. We are very interested in moving to you for accounting also - our current accountant is lovely, and his fees are very low, but the more I'm learning, the more I'm realising this sweet man has oftentimes not steered us in the best directions, and definitely never asset structured us properly - and that is all in the plans to get sorted thx to getting to know GRA. - Tat & Trip - June 2016

Seminars and workshops for property investors, business owners and anyone seeking to create and protect their wealth.

View all our upcoming events

Learn More

Investing in residential property?

Put this at the top of your reading list.

If you're investing in residential property, seeking to maximise your ability to succeed and minimise risk, then this is a 'must read'.

Matthew Gilligan provides a fresh look at residential property investment from an experienced investor’s viewpoint. Written in easy to understand language and including many case studies, Matthew explains the ins and outs of successful property investment.