What Happens to a Life Insurance Trust If Both Parents Die?

The trust keeps working. If both parents die at the same time, the trust doesn't fail or freeze, it simply needs someone with the legal power to sign the release paperwork before the money can reach your children. On a relevant life policy, the business is always named as a trustee alongside any personal trustees, so who steps in next depends on whether the business has other shareholders. This article walks through exactly who takes over, in what order, and how the funds eventually reach your children.

Key facts

• A life insurance trust doesn't fail if both parents die together, it just needs a trustee able to sign the release forms.
• On a relevant life policy, the business is always a trustee alongside any personal trustees, such as parents.
• If both parents die together and there are other shareholders, those shareholders automatically become the trust's de facto trustee.
• If the parents were the only shareholders, a personal representative can appoint a new director so the trust paperwork can be signed.
• Children rarely receive large sums outright, trustees usually continue to hold and manage the funds until an age set out in the trust deed.
• A court can replace an unresponsive or absent trustee, so funds are never permanently stuck.

Who becomes trustee if both parents die at the same time?

It's common for one parent to be named as the personal trustee, working alongside the company, on the assumption they'll look after the funds if the other parent dies first. If both parents die together, that leaves the company as the only remaining trustee, and what happens next depends entirely on who else sits behind that company. Our guide to relevant life insurance and trusts covers how trustees are set up in the first place, so this article picks up from the point both parents have died.

What if there are other shareholders in the business?

Where the business has shareholders beyond the two parents, those shareholders automatically become the company's de facto trustee. They can sign the paperwork to release the funds from the trust, but they can't change who benefits or keep any of the money themselves, their role is purely to carry out the instructions already set out in the trust deed.

What if the parents were the only shareholders?

If the parents were the company's only shareholders, there's no one left inside the business to act. In this case, the personal representative, usually named in the will of whichever parent died last, has the legal authority to appoint a new director to the company. That new director can then act as the company's trustee and sign the release forms alongside any other trustees. HMRC's guidance on trustee responsibilities sets out the general duties a trustee takes on once appointed.

How do the children actually receive the money?

Once the trustees are in place and agree the funds can be released, the payment normally goes to a trustee, or to a guardian acting for the children, rather than directly to a minor. Children rarely take large sums outright at that point, trustees usually continue holding and managing the funds until an age set out in the trust deed, often 18 or 21, releasing money for specific needs such as school fees or living costs in the meantime. The exact process depends on the wording of your trust deed and the ages of your children when the claim is made, so it's worth reviewing this with your adviser and a solicitor while setting the policy up, rather than leaving it to be worked out after the event.

FAQs: trustees and simultaneous death

Does the trust stop working if both parents die together?

No. The trust keeps running, it simply needs a trustee with the authority to sign the release paperwork, whether that's another shareholder or a newly appointed director.

Who has the legal power to appoint a new trustee?

Where other shareholders exist, they can act as trustee straight away. Where the parents were the only shareholders, the personal representative of whichever parent died last can appoint a new director to take on the role.

Can the money get permanently stuck if there's no one left to sign?

No. A court can replace an unresponsive or absent trustee, which prevents the funds being left indefinitely unreleased.

Do the children receive the funds straight away?

Not usually. Trustees typically continue to hold and manage the money until an age set out in the trust deed, releasing funds for specific needs before then.

Should we still name a backup trustee even though the company can step in?

Yes, naming a backup personal trustee, alongside a guardian for young children, gives clearer instructions than relying on shareholders or a personal representative to work it out after the event.

Written by Alex Ogden DipFA | Director | Executive Life

Alex Ogden DipFA holds the Level 4 Diploma for Financial Advisers (DipFA) awarded by the Walbrook Institute London, formerly known as the London Institute of Banking & Finance (LIBF), the FCA's benchmark qualification for retail investment advisers. He is authorised by the FCA — Ref: AJO01072.

Last reviewed: September 2026 — Next review: April 2027 | Estimated reading time: 4 minutes

This article is for information purposes only and does not constitute financial advice. Tax and trust treatment depends on individual circumstances and may be subject to change. Always seek professional advice before making financial decisions.