How can an insurance trust beneficiary confirm that a trustee is ‘doing the right thing’? A trustee’s basic fiduciary duty is to maximize the probability of a favorable outcome to the trust estate. Unless otherwise agreed, beneficiaries may reasonably assume, at the time the trust policy is accepted and at all times during which the trustee maintains management control, the trustee has determined (1) scheduled premiums are adequate to sustain the policy for the insured’s lifetime, and (2) the product and underwriting carrier are suitable to successfully achieve the trust’s objectives as dictated by the governing document, TOLI Investment Policy Statement, and trustee’s risk management procedures.

An insurance trust beneficiary should annually request:

• A copy of the trust’s current TOLI Investment Policy Statement.
• The most recent actuarially certified premium adequacy evaluation.
• Confirmation that current policy values are performing consistent with policy acceptance benchmark values.

When a family member serves as an unskilled personal trustee, beneficiaries should clarify the life insurance expertise provided directly by the personal trustee and indirectly by professional advisors assisting the trustee.

If a TOLI policy is significantly under-performing its acceptance benchmark values or no longer suitable for the trust’s purpose, a beneficiary should expect the trustee to offer restructure recommendations.

TAC assists beneficiaries in confirming the probability of a favorable outcome to the trust estate.