A Declaration of Trust for a Large Life Policy is a legal document that outlines the ownership and distribution of a life insurance policy among multiple individuals. This document is typically used when a policy is held by more than one person and there is a need to specify the distribution of the policy's benefits in the event of the death of the policyholder.

This Declaration of Trust can provide clarity and certainty for all parties involved, by setting out the specific details of the ownership and distribution of the policy. It is particularly important for those individuals who have a significant interest in the policy, such as a partner, spouse or family member.

The Declaration of Trust can be tailored to the specific needs of the policyholder and the beneficiaries, and can be amended as circumstances change. It is also important to note that while this document may provide clarity and certainty, it does not necessarily override any other relevant legal documents or agreements that may already be in place.

Our recommendations are based on the client's current policy. For clients with one policy, we advise assigning it to a Life Assurance Trust, which is excluded from the estate of IHT. However, we suggest keeping the life cover sums assured well under the NRB to avoid periodic and exit charges after death.

To make the cover more tax-efficient, it's recommended to re-broke where possible and assign multiple policies to multiple trusts. We suggest allocating £250k per trust for growth purposes.

In the event that it is not feasible to re-broke a single life policy with significant sums assured, one option to increase tax efficiency for periodic and exit charges is to assign it in the following manner: x1 deed of assignment (large life policy) to x Declaration of Trusts (large life policy). The required number of Declaration of Trusts is determined by dividing the value per policy by £250k.

These trusts must be registered with HMRC.