Insurance Trust Trustees

When an individual accepts a position as Trustee for an insurance trust, he or she takes on a great deal of responsibility. However, not all individuals have the skills required to fulfill the fiduciary duties that come along with being a trustee.

Trustees owe a fiduciary responsibility to the beneficiaries of the trust. Some trustees have a difficult time understanding they are managing the trust assets for the benefit of the beneficiary, not for the individual who established the trust. Additionally, a trustee should take an active role in managing the insurance policy under the trust in order to meet its fiduciary duty to the beneficiary.

Trustees must also have the ability and skills necessary to oversee the trust. This includes meeting all the requirements found in the Prudent Trustee Rule, the Uniform Prudent investors Act, the Office of Thrift Supervision, the Office of the Comptroller, and the State Departments of Banking.

Though incorporating trust-owned life insurance into an estate plan has many perks, it is important to ensure that the trustee understands the responsibilities that come with the title, and that he or she is capable of performing the required tasks.

See Can You Trust Your Trustee?, Investopeida, Jul. 11, 2011.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.