A life insurance trust bank account is not always compulsory, but when a policy held in trust pays out, the money goes to the trustees, so they need somewhere to receive it. Zurich's Absolute Trust Deed (August 2025 edition) says: "As Zurich will make payment to all the trustees, they may need to set up a trustee bank account."

Planning a trust, or likely to be the one who makes the claim as trustee? A broker authorised by the FCA handles questions like how trustees get paid, and you can reach one without charge through the form on this page.

Is a trustee bank account compulsory?

Zurich's trust documents say trustees "may need" or "should consider" one, not that every trust must hold an account. Its notes for employers using its Relevant Life Policy trust, based on HMRC practice as at 1 July 2022, say: "As Zurich will make any payment to all the trustees you should consider setting up a trustee bank account before the proceeds are paid."

One case is firmer. Zurich's Absolute Trust Deed says that if the policy includes Family Income Cover, which pays a regular income after a death or critical illness until the end of the term, "then a trustee bank account must be set up to receive the ongoing payments until the end of the term of the policy". Family income benefit in trust covers that policy type.

How do insurers pay a policy held in trust?

Legal & General's life insurance policy terms (October 2026 edition, QGI12849) say: "If the policy has been placed in trust, we'll pay the trustees." The same terms say the lump sum is paid in pounds into a UK bank account; anyone taking it into an account abroad pays the cost of arranging that.

Zurich's Personal Protection policy terms (April 2026 edition) say it pays the person legally entitled to the money, which can be one or more trustees, and a trustee counts as entitled if the other trustees have authorised the payment in the form Zurich requires.

A 2022 Ombudsman decision, DRN-3539092, shows what Zurich put to trustees who wanted to surrender a policy. That was a surrender, not a death claim, but its withdrawal form is plain:

If the payment is to be made to the trustees jointly but you do not have a trustee bank account, we recommend you contact your bank now to arrange this. The bank account must be in the name of all trustees.

For that surrender, Zurich told the trustees the money could go to a trustee bank account in both names, by cheque payable to both of them as trustees, or direct to the beneficiaries. The trustees, unable to open a joint account and wary of a cheque, wanted it paid into their own current account; the Ombudsman found Zurich had not acted unfairly in following its procedures to protect the trust.

Your own insurer's choice of payment routes is worth putting to the broker when they call.

What if the trustees cannot open a trust bank account?

It can be hard. In a 2024 decision, DRN-4708666, the Ombudsman wrote: "I was aware that it was increasingly difficult for trusts to open bank accounts, as NatWest are not the only bank to have withdrawn from the sector." In that case NatWest's investment department would release trust money only to a trust current account, and NatWest said the only other option was a solicitor's or accountant's client account. Both trustees lived overseas, and because NatWest's own error had closed the trust's account, the Ombudsman directed it to open one for six months.

Banks that do offer trust accounts set their own terms. Metro Bank's trustee banking page (read 26 October 2026) says the trust must be established in the UK with most of its assets here, and at least 50% of the trustees, settlors and beneficiaries must be UK resident, with exceptions for certain countries. It asks for a form signed by all the trustees, a certified copy of the trust deed, identity checks on the people named in the trust, and either proof of registration on HMRC's Trust Registration Service or a valid reason for exemption. Its fees are £150 to open and £5 a month for balances under £25,000.

Barclays publishes a Discretionary Trust Agreement form (created November 2024) that trustees must complete before it opens a business account for a discretionary trust.

If you are unsure what your insurer would take in place of an account, the broker can look at that during the call.

How do trustees pay the money on to the beneficiaries?

That depends on the trust deed. What a life insurance trustee does covers the duties, life insurance trust options explains how far trustees can choose who is paid, and life insurance in trust for a child covers a young beneficiary.

On timing, Zurich's Relevant Life Policy trust notes say there is no time limit as such, but that trustees are "likely to be failing in their duty to the beneficiaries if they do not use the funds to provide for the beneficiaries soon after receiving them".

The bank can add its own steps. Metro Bank says its trust accounts include a cheque book for payments to third parties, signed under the account's signing rules, and Barclays' form for discretionary trust business accounts has trustees agree to tell the bank who a new beneficiary is, within 14 days of the change, before paying them.

Does paying the money into a trustee account mean registering with HMRC?

Not necessarily, but it can. GOV.UK's guidance on checking if you need to register a trust (published 30 June 2026, last updated 13 July 2026) says you may need to pay a £5,000 penalty if you fail to register a trust that must be registered. Among the trusts it says do not need to register, unless liable to UK tax, is "a trust holding life insurance policies that only pay out on death, illness, or disability".

Zurich adds its own detail. Its policy terms say a trust may need to be registered when a life cover claim is paid to the trustees and they do not distribute the funds to the beneficiaries within two years of the date of death. For its critical illness, total permanent disability and terminal illness claims, Zurich says "The trustees will have 90 days from the date the claim payment is received into the trustee bank account to register the trust on the TRS." The two-year point is HMRC's too: its Trust Registration Service Manual, section TRSM23030 (read 26 October 2026), gives trustees of a qualifying policy two years from the death to pass the money on before the trust must register. The 90-day wording is Zurich's own; does a life insurance trust need to be registered goes through the question.

These rules can change, and how they apply to one payout is a question for a solicitor or tax adviser. On the insurance side, a free call with a broker can cover what your insurer expects from trustees; the form on this page sets it up. The wider picture is in Trusts and tax.

Frequently asked questions

What is a life insurance trust account?

The trust is the legal arrangement, set out in what is a life insurance trust. A trustee bank account is a separate account held by the trustees for the trust's money.

Can the payout go into a trustee's personal account?

It depends on the insurer. Zurich's Personal Protection terms let it pay one trustee if the others authorise that in the form it requires; in the surrender case above, Zurich would not pay into the trustees' own current account, and the Ombudsman did not make it.

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