Life assurance policies
These also vest in the trustee as part of the client’s estate and how the trustee deals with them will depend on whether there is a surrender value or not.
Any policy which has a surrender value will vest in the trustee for the duration of the bankruptcy and the trustee should attempt to realise the asset by surrendering the policy or having a third party buy out the trustee’s interest.
If the surrender value of the policy is more than £1,000, the client will not qualify for a MAP.
Any policy which does not have a surrender value should be treated as a non-vested contingent asset which will vest in the trustee for a period of four years from the date of sequestration.
Should the asset be realised, it will form part of the client’s estate and vest in the trustee for the benefit of the creditors.
If the policy is put ‘in trust’ then it does not vest in the trustee.
However, if the client is the beneficiary of the trust, and it becomes due during the four years from the date of sequestration, it does then vest in the trustee.
It may be worthwhile asking the client to make sure all policies are put in trust for a family member and not themselves.
You can do this with the help of a regulated financial adviser. There is usually no fee for this.
Further reading on trusts can be found at .