As a TOLI trustee, you have a fiduciary responsibility to ensure that every transaction - either a new policy sale or replacement is not only suitable for your client, but also in your client’s best interest.
A TOLI trustee we work with received a request from a grantor tired of gifting to pay premiums on his portfolio of whole life policies. His agent suggested that the three policies be replaced with one policy with a reduced death benefit. The existing portfolio totaled $5.7 million of coverage. The agent proposed transferring the $2.1 million of cash value into a $3 million equity [...]
As the federal estate tax laws changed, the use of new irrevocable life insurance trusts (ILITs) diminished, but the work required to administer existing ILITs went up along with the potential liability attached to the asset class. There are several reasons for this. 1. As a country, we are aging and the population of the average TOLI portfolio is aging too. For example, 25% of [...]
The most common fear for a life insurance trustee is that somehow the ball is dropped and the policy in their care lapses. After all, a trust-owned life insurance (TOLI) trustee, even if they are not sophisticated in all the nuances of life insurance policy management, should at least be able to keep the policy in force. But unintended lapses do happen, and when they [...]
The answer is an emphatic NO. Some permanent life insurance policies, specifically guaranteed universal life (GUL) and Whole Life (WL), have required premiums, though WL out of pocket premiums can be reduced by dividends, paid-up addition cash values or policy loans. But the premium paid is not the actual cost of the policy and finding the underlying costs on the policies is a challenge. For [...]
What steps should you take if a grantor says they want to surrender their policy? In the decade-plus that we have been managing life insurance for TOLI trustees, we have noticed that the weak link in their services usually is remediation. The inability to analyze policy options in changing situations is an area of future liability. Some trustees we have spoken with have surrendered policies [...]
Over the years, we at ITM TwentyFirst have been leaders in peer education. The TOLI Handbook, a free download available here as a PDF, provides industry peers with a single source guide for managing trust-owned life insurance (TOLI) trusts and policies. We have, over the years, provided hundreds of hours of professional CE for several professional designations. Our staff is encouraged and incentivized to seek [...]
What is most important when determining the liability of a trustee’s actions? Over the years, we have noticed that the knowledge of TOLI trustees varies from trust company to trust company. After publishing the TOLI Handbook, we thought we would “chunk it down” with the TOLI Challenge—a series of questions designed to test the knowledge of the typical TOLI trustee. We will be publishing questions [...]
We recently wrote about remediation and the challenges that TOLI trustees have when managing a policy. Remediation is not just developing the best options for an under performing policy, increasingly it means maximizing the value of a policy that a grantor believes is no longer needed, or one whose expected funding has stopped. These decisions must be well-thought-out and every data point that can be [...]
Directed Trusts are a growing reality as more states adopt the Uniform Directed Trust Act. Delegated trusts are as old as the UPIA, but are you really prepared to confidentially articulate the difference between the two models? Most trust organizations are being asked to consider one or both of these options by someone in their market or the bank. This webinar will compare and [...]
