Thursday, July 18, 2013
Trustees of trusts owning life insurance should prepare for a bumpy road ahead with interest rates on the rise. Because a significant amount of life insurance is held in trusts, beneficiaries are inclined to question how trustees handle their fiduciary duties. Also, most trustees of trusts owning life insurance are not experts in both trust matters and life insurance matters. To help protect themselves, trustees of trusts owning life insurance should do the following:
- Ensure there is enough professional liability insurance to cover the death benefit amount.
- Instead of allowing insurance representatives to “audit” the policy, hire a professional fee-only advisor with no financial stake to review the policy.
- Keep good records of all decisions.
- Prove due diligence by researching how trust policies operate.
See Robert Hayden, TOLI Trouble, Wealth Management, July 10, 2013.