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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.

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Matthew Gilligan
Director

09 522-7955

[email protected]

© Gilligan Rowe & Associates LP

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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.

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It is my pleasure to write a testimonial with regards to the nomination of the professional trustee team at Gilligan Rowe and Associates, as a finalist for New Zealand Corporate Trustee of the year. They have acted as a professional trustee for my trust for many year now. I have been thoroughly impressed by their level of knowledge, professionalism, honesty and integrity in all my dealings with them. In addition, through their regular client seminars that I have attended, I have been very impress by the thoughtful critiques of cases and changes in the direction of trust law, and their possible impact on me. I can recommend them without hesitation. Sincerely - BV

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