Trust-Owned Life Insurance

E. Randolph Whitelaw (Trust Asset Consultants, LLC) and Richard M. Weber have recently published their article entitled Trust-Owned Life Insurance: Risk Management Guidance for Fiduciaries, Est. Plan., Sept. 2005, at 14.

Here is the abstract of their article as supplied by SSRN:

Since 1992, the unmanaged liability represented by trust-owned life insurance (“TOLI”) has been the subject of many cautionary articles. Despite the warnings of fiduciary law and insurance experts, professional fiduciaries generally have not implemented meaningful TOLI procedures or policy performance evaluation capabilities. As a result, most non-guaranteed death benefit TOLI policies require restructure for performance and/or suitability reasons to achieve the insurance trust’s objectives.

This article explains how a ‘best practices’ TOLI risk management program can facilitate credible and defensible policy acceptance, management and restructure determinations that safeguard the interests of all insurance trust parties – trustee, grantor, beneficiaries, and professional advisors. The basic duty of a fiduciary is to maximize the probability of a favorable outcome to the trust estate. Contemporary evaluation tools and products are available to achieve an insurance trust’s objectives – they just need to be used.