The Self Evaluation for ILIT Trustees

As a trustee, are you able to answer “yes” to the following questions? Are all the policies under your care financially sound? Are you able to assure the grantor(s) that his/her estate and financial planning expectations will be met? Are you familiar with the myriad of issues that could negatively affect the trust’s policies? Do you have the necessary knowledge of life insurance to perform the needed evaluations? How effective are your current risk management strategies? Are you doing your best to protect the value of the trust? If continued premiums are required and the grantor fails to make

The Active Management Required for Trust Owned Life Insurance

How trustees review and manage life insurance policies varies widely and few, if any, have formal review policies and procedures in place despite the various regulations and the vast array of duties and responsibilities assumed by them. There are many professional trustees who have retained services to regularly review and assist with the management of these specialized assets. However, for many trustees, the extent of reviewing life insurance policies consists of monitoring the insurance carrier’s financial strength ratings, which is perhaps the least likely source of trustee liability. Some trustees will also obtain an in-force illustration, which is a

The Many Duties and Responsibilities of ILIT Trustees

Trusts have long played an essential role in estate planning for many individuals and families.  The assets held in trust can vary from real estate to stocks, bonds, insurance policies, jewelry, and other collectibles.  This deep-dive will focus on trust held life insurance policies, which can be considered a special asset class. For some, trust held life insurance has become a black box full of mysteries and administrative nightmares. Why Are Trust Held Life Insurance Policies so Difficult to Manage Life insurance policies are complex and often misunderstood financial instruments that require active management by the policy owners. These

Directed TOLI Trusts – the Good, the Bad and the Best Solution

Updated 11/26/19 Originally posted 10/1/18 After over a decade in the TOLI (trust-owned life insurance) business, we are aware of trends that come and go. One trend we are seeing more and more lately is the use of directed TOLI trusts. Directed trusts divide the responsibilities of the trust into two distinct tasks – administration and asset management. Directed trusts are not new in the industry. Once, all trustees retained full authority over both the administration of the trust and the management of the trust asset, but as the trust and financial services world evolved, responsibilities blurred. Today it

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The Many Reasons to Hire a Corporate Trust Owned Life Insurance (TOLI) Trustee

Life insurance is an important investment. Trust-owned life insurance policies are inherently significant sums of money and therefore it's vital that they're managed appropriately.  Policies of a million dollars or more are common: many policies are valued at tens of millions of dollars. So why is it that these policies are often treated with less care than other investments? Some grantors, hoping to save money, look to a non-professional trustee, usually a family member or friend, or a professional (attorney, CPA, advisor) they already have a relationship with. These people are not trained to act as a trustee, and

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