Contingent Survivorship Insurance
Where a trust fund is being wound up or varied it may be necessary for an assumption to be made that certain persons will not predecease the Life Tenant, but the trustees may retain a potential personal liability once the proceeds of the trust fund have been distributed, should a younger life predecease the Life Tenant and a beneficiary who had not been provided for becomes entitled.
If trustees agree to act outside the terms of the trust deed and if deaths occur in an unforeseen order, thereby creating new potential beneficiaries to the trust (e.g. grandchildren) who may not have consented or been capable of consenting to the breach of trust, they may become personally liable for the reinstatement of some or all of the trust fund.
The risk to the trustees exists until such time as the Life Tenant dies.
- Upon payment of a one-off premium cover is provided in perpetuity
- Removes the risk to the trustee of personal liability arising out of the distribution of the trust funds without having provided for potential new beneficiaries to the trust
- Allows the trust to be wound up where the current beneficiaries have agreed the trust is no longer required or should be modified
- Ensures that the potential interests of other parties (in particular minors) who have not consented to the new arrangements are provided for
What The Policy Covers
- Any liability of a trustee to reinstate the trust fund for the benefit of newly entitled beneficiaries to ensure they receive their entitlement under the trust fund, insofar as it is not provided for by any new arrangements
- Any other costs and expenses incurred with the prior consent of the insurer