Trust Owned Life Insurance (TOLI) Review Process

New Trustee Standards

During the last 10 years, Kansas and Missouri have adopted new standards for trustees contained in the Uniform Prudent Investor Act (UPIA).

In the past, it was generally expected the trustee would retain and manage the ILIT’s insurance policies until the insured’s death. UPIA’s new fiduciary standards make automatic retention of the original policies a potentially dangerous strategy. If the beneficiaries feel you have performed poorly, they can claim you failed to protect their interests and hold you responsible for their losses.

Protect Yourself

Here are some steps you can take to reduce your exposure to personal liability:

1. Review the trust document and list your responsibilities.
2. Create a written Investment Policy Statement to explain how you intend to manage the trust's assets.
3. Review life insurance policies on a regular basis and track performance.
4. Hire one or more experts to assist in the life insurance review process.

We can help you design an Investment Policy Statement and make recommendations about retaining specific policies or updating to new life insurance products which may be more suitable for the trust. We perform this service on a fee basis.