Some life assurance policies do not count as part of a deceased person’s estate. This will be the case where he or she had taken out a policy and had it written on trust for a third party – usually family members. If this has been done a substantial reduction in inheritance tax can be achieved.
Often, especially with smaller value policies, the benefits will be payable to the deceased’s personal representatives, i.e. his or her executors or administrators and therefore the policy proceeds form part of the estate.