Trustees have a fiduciary obligation to the trust they represent. The decision to have an evaluation done on any life insurance policies the trust owns is recognized as one of those fiduciary obligations. As the secondary market continues to grow, increasing numbers of trustees are looking at life insurance settlements as a means of liquidity.
As the insured ages, premiums increase dramatically. Very often those premiums will become prohibitive for the trust to maintain. Before life insurance settlements entered the financial landscape, many trustees found themselves in the difficult situation of possibly surrendering a policy. This was a move that was obviously not what the grantor originally intended. However, as the times and financial health of individuals change, life insurance settlements have been created and are often the best option available.
With the knowledge that the beneficiaries will ultimately profit from the settlement proceeds, trustees should carefully analyze their specific scenario and determine if an evaluation is appropriate.
If you want to learn more, a conversation with Genesis is your next step!
