Putting life insurance in trust for a child means the policy is written so that the payout goes to trustees you name, who hold it for the child until the money can be passed on. This page covers how a trust is set up for a child, the types insurers offer and how to choose trustees.

Setting this up for a particular child and policy is easier with someone who can see the whole picture. An FCA-authorised broker will talk the options through if you ask; the form on this page requests that free call-back.

Why does a policy for a child need a trust?

HMRC's Trusts, Settlements and Estates Manual says that a minor cannot give a valid receipt, so the money is passed to trustees, "who are able to give the valid receipt, to hold in trust for the minor". That passage is about a legacy left in a will, not a life policy, but the insurers' trust guides give trustees a similar role: Aviva's guide says the trustees look after the money, investing it if necessary, and pay it out under the terms of the trust.

Without a trust, Aviva's guide to trusts (January 2026 edition) says the payout would go to the policyholder's estate, and probate or letters of administration would be needed before the insurer could pay. In trust, the trustees claim and are paid directly. Whether a trust is needed at all is covered in does life insurance need to be in trust.

A trust also gives control over timing. Legal & General (L&G), in its technical guide to its Absolute Trust (W12711, August 2026), says a trust "can control when the money from the life policy will be paid out", so that children receive "some financial support from the money, but do not have full access to it".

How is a trust for a child set up?

The insurers' guides describe broadly the same route, and how to put a life insurance policy in trust sets out the steps in full. For a child, the points that matter are these:

  1. Pick the insurer's trust form. Aviva offers two forms of trust, a bare trust and a discretionary trust. Royal London's bare trust form (P8B0068, June 2026) says it can be used only with certain Royal London plans, so the form has to match the policy. Whether a particular policy can take the form is a point for the free call-back to settle.
  2. Name the child as a beneficiary. Aviva's guide says a beneficiary "can be any age and could be an unborn child", such as a future grandchild.
  3. Name the trustees. You are one of them: Aviva's guide says the person setting up the trust has to be a trustee, with at least one other. Royal London's form likewise makes the donor a trustee and requires at least one additional trustee.
  4. Sign it. L&G's guide says the donor and the trustees must sign the trust deed.

Aviva's guide explains trusts under the law of England and Wales and says that readers in Scotland or Northern Ireland may wish to take their own legal advice. It also says it cannot advise whether a trust suits your circumstances, and recommends professional legal advice on that.

Which type of trust suits a child beneficiary?

Insurers offer two main kinds. In a bare (absolute) trust the beneficiaries are fixed at the start. In a discretionary trust the trustees decide who is paid, how much and when. Life insurance trust options compares them in full; here is how they behave when the beneficiary is a child.

PointBare (absolute) trustDiscretionary trust
Who decides what the child getsFixed at the start. L&G's guide says beneficiaries "cannot be changed in the future".The trustees. Aviva's guide says they decide who benefits, how much and when.
When the child can claim the moneyGOV.UK says the beneficiary has the right to all of the capital and income at any time once 18 or over in England and Wales, or 16 or over in Scotland.Not as of right. Aviva says the trustees can pay out if the beneficiaries are mature enough, or keep the money in trust if the time is not right.
If the child is under 18 at the payoutL&G says the trustees have the power to invest the proceeds for the beneficiaries. Royal London's form lets them use income for a child's maintenance, education or benefit.L&G says the trustees have the power to invest, and may be able to make payments out to support the beneficiaries.
A child born laterL&G says children born later cannot be included.Aviva says the person who set up the trust can nominate beneficiaries to be added, which it notes is useful if there is another child.

Aviva's guide describes the bare trust as the simplest form and the discretionary trust as more complex but more flexible. It notes the bare trust lacks flexibility and asset protection for young adult beneficiaries. Tax is treated differently for each type, as GOV.UK explains; is life insurance taxable in a trust covers that, and tax rules can change.

Choosing between them is a decision for you and a legal adviser. Pairing an insurer's trust with the cover you are quoted is a question to raise with the broker, at no cost, after you send this page's form.

Who should you choose as trustees?

L&G's guide says trustees can generally be anyone over 18 and of sound mind whom the person setting up the trust believes will act in the beneficiaries' best interests; solicitors and accountants can act, but charge for it. It adds that it is normally sensible to appoint at least two trustees in addition to yourself.

Aviva's guide makes three practical points. Trustees need good financial knowledge and to be someone you can trust, such as a friend, family member or professional adviser. Asking a beneficiary to be a trustee may not be a good idea, as it could lead to a conflict of interest. And appointing more than one additional trustee is recommended (though not required), so that there will always be two.

Because the trustees of a discretionary trust hold "considerable power", the same guide says it is especially important to choose people who understand your wishes. If a trustee dies, L&G says the others can carry on and a replacement could be appointed. What the role involves day to day is for the life insurance trustee page.

What happens when the trustees make a claim?

When a claim is made, L&G's guide lists three items the trustees send to its claims department: the trust deed, the original policy documentation and a death certificate. They are paid by direct credit once the claim is accepted. Aviva's guide says the money then has to be invested and managed until it is right to give it to the beneficiaries.

A trust settles who looks after the money, not who looks after the child: choosing a guardian is a separate step, which life insurance for single parents covers. Where the cover is a couple's shared policy, joint life insurance in trust explains how it is handled.

If you are weighing a policy with a child in mind, a broker can explain the options for your own situation, free, once you have asked through this page's form.

Frequently asked questions

Can a child be the beneficiary of a life policy without a trust?

Aviva's guide says that without a trust the benefits would be payable to the policyholder's estate, so the will would need to direct them to the people intended. The broker can say how a given insurer treats a named child under 18 when they ring back, at no charge. Changing a beneficiary on a policy that is not in trust is covered in change life insurance beneficiary.

Can trustees pay a parent or guardian instead of the child?

Royal London's bare trust form says its trustees may pay or transfer assets or income to the "parent or guardian of a Minor who is beneficially entitled", and that their receipt is a full discharge to the trustees. Other insurers' forms may differ, so read the wording of the form you are given.

Do I have to be a trustee of my own child's trust?

With the forms described above, yes: Aviva, L&G and Royal London each make the person setting up the trust one of the trustees. Aviva and Royal London also require at least one other trustee, and L&G says it is normally sensible to have two more.

Is putting a policy in trust for a child free?

L&G says it provides its draft Absolute Trust deed to its customers for free. Other insurers and solicitors are covered in the cost of putting life insurance in trust.

Sources