ILIT Management Responsibilities
An ILIT trustee has the sole fiduciary responsibility for all trust and policy administration activities, including annual policy risk management
determinations and communication. If a trustee lacks life insurance and policy risk management expertise, the trustee also has a duty to delegate
these functions to providers that have the requisite TOLI-specific expertise. To avoid breach of trust and predatory practices allegations resulting from
the selection of unqualified providers, the below matrix summarizes typical ILIT responsibilities and delegated functions.
Trustee: A trustee should serve as a trust and beneficiary ‘protector’ with contractual responsibility to perform ILIT duties in a prudent manner as set out
in the trust agreement, UPIA, TOLI Investment Policy Statement and other known fiduciary, life insurance and regulatory oversight guidance.
ILIT and TOLI Admin: A trustee’s annual ILIT administration and TOLI risk management duties may be delegated to an independent third-party that has
no affiliations with policy sales providers and no partner relationships with other fee-based providers to cross-sell TOLI services.
TOLI Policy Evaluation: Annual TOLI performance evaluations should be prepared by an independent fee-based provider that has the requisite expertise,
no affiliations with policy sales providers, and no partner relationships with other fee-based providers to cross-sell TOLI services.
TOLI Performance Report: Annual TOLI performance reports should be prepared by an independent fee-based provider or consultant that offers ‘dispute
defensible’ TOLI-specific performance evaluations or a trustee with the requisite life insurance expertise.
Tax and Accounting: All tax matters should be coordinated by an Accountant serving the Grantor or a Professional Trustee with accounting staff.
Legal Documents: An attorney representing the Grantor or a Professional Trustee with legal staff should prepare ILIT documents including annual
Crummey Notices.
Investment Policy Stmt: The Investment Policy Statement is not a legal document and can be prepared by the trustee and/or a fee-based Consultant in
consultation with the grantor and beneficiary(ies).
Policy Sales: Coordinated by a licensed agent selected by the Trustee.
Policy Remediation: Coordinated by a fee-based consultant or licensed agent selected by the Trustee.
Life Settlement:
Coordinated by a licensed life settlement consultant selected by the Trustee.
