If, when you die, your assets are worth more than £325,000 (2012/2013) they will be subject to up to a 40% inheritance tax.

A life insurance trust is essentially a legal safety deposit box for your assets. If you place property, money and assets within it seven years before your death, they will be exempt from inheritance tax upon their release. You can specify who your beneficiaries are, and a quick and stress-free release to them upon your death. Once began, a life insurance trust cannot be cancelled.

There are three people needed to create a trust – a settlor, a trustee and a beneficiary. The settlor creates and owns the trust and stores their assets within it. The trustee is the person or body who you appoint to look after the trust and makes sure that the assets reach the right people after you are gone. The beneficiary is the person or persons who you wish to receive your assets.