Section 6 — Creating a Trust Under MWP

A trust created by the words of the section

A section 6 trust needs no separate deed: the section creates it by its own words. Once a married man's policy on his own life is expressed on its face to be for the benefit of his wife, or his wife and children, or any of them, it is a trust for them.

That expression on the face of the policy is the condition. The section does not make registration, a separate trust deed or a trustee's signature the test.

What the insurer's paperwork does

The Act prescribes no form. Insurers record the MWP wording through their own addendum or declaration, so that the policy carries the statement that it is for the benefit of the wife and children.

Labels such as 'Form A' and 'Form B' appear in older material as if they were laid down by the Act. They are insurers' own labels for their addenda, and not every insurer uses them. What matters is not the name of the paper but whether the policy is expressed on its face to be for the wife or children.

According to the interest expressed

The policy is a trust for the wife and children according to the interest expressed in it. The addendum is therefore where the beneficiaries are named and, where the insurer's format provides for it, where their shares are set out.

Because the trust takes its terms from what the policy says, the wording recorded at this stage is what the trustee later acts on.

How long the trust lasts

Section 6 applies so long as any object of the trust remains. For that time the policy is not subject to the husband's control or to his creditors and does not form part of his estate. The section carries one exception: where the policy was effected and the premiums paid with intent to defraud creditors, they may be paid out of the proceeds.

What happens if every beneficiary dies before the husband is not answered by a single line of the section. It can depend on how the interests were expressed in the policy, so no one outcome can be assumed.

What is left to each insurer

Several practical points are not in the Act at all. Who may be a trustee, and whether a loan or surrender is possible and on whose signatures, are set by each insurer's MWP terms. Insurers differ, and the addendum for the particular policy has to be read. Section 6 does not answer whether MWP wording can be added after a policy has been issued; that question is one to put to the insurer in writing.

Rules at a glance

Key points

• Section 6 creates the trust by its own words once the policy is expressed on its face to be for the wife, or the wife and children.
• Registration, a separate deed or a trustee's signature is not the test under the section.
• The Act prescribes no form; insurers use their own addendum or declaration.
• 'Form A' and 'Form B' are insurers' own labels, not statutory forms.
• The trust follows the interest expressed in the policy and lasts so long as any object of the trust remains.
• Who may be a trustee, and the handling of loans and surrenders, are set by each insurer's MWP terms.

Common misunderstandings

• A section 6 trust does not need a registered trust deed: the section creates the trust once the policy is expressed on its face to be for the wife or children.
• 'Form A' and 'Form B' are not forms under the Act: they are labels some insurers use for their own addenda.
• The trust does not last for ever in all events: section 6 applies so long as any object of the trust remains.
• The outcome where all beneficiaries die before the husband is not fixed by the section: it can depend on how the interests were expressed.
• The right of the proposer to act as trustee is not given by the Act: it depends on the insurer's addendum.

Questions people ask