Advice for Trustees of Trusts Owning Life Insurance

Trustees of trusts owning life insurance should prepare fora bumpy road ahead with interest rates on the rise.  Because a significant amount of lifeinsurance is held in trusts, beneficiaries are inclined to question howtrustees handle their fiduciary duties. Also, most trustees of trusts owning life insurance are not experts inboth trust matters and life insurance matters. To help protect themselves, trustees of trusts owning life insuranceshould do the following:

1. Ensure there is enough professional liabilityinsurance to cover the death benefit amount.
2. Instead of allowing insurance representatives to“audit” the policy, hire a professional fee-only advisor with no financialstake to review the policy.
3. Keep good records of all decisions.
4. Prove due diligence by researching how trust policiesoperate. 

See Robert Hayden,TOLI Trouble, Wealth Management, July10, 2013.