Wealth Advisor Resources

5 Steps for Wealth Advisors Acting as a Life Insurance Trustee

Michael Brohawn CFP®, CLU®, CAP®
Your Life Insurance Solutions

Apr 12, 2021

If you are a Financial Advisor, Attorney, CPA, or other Professional who has taken on a life insurance trust for profit or accommodation, read on….

Most poeple do not know it, but non-corporate trustees like you oversee almost 80% of trust-owned life insurance.

You may believe you are held to a lower standard if “trustee” is not in your professional job title.

Perhaps, but you still have a fiduciary responsibility and liability.

To minimize YOUR liability, you should take these 5 Steps:

  1. Have a system in place to administer the trust that includes documentation of all decisions and transactions.
  2. Make sure you understand the policy and its nuances.
  3. Review the policy annually to ensure it is on track.
  4. Get to know the beneficiaries of the trust.
  5. Make sure that the beneficiaries are aware if any changes are made to the trust asset. It is the beneficiaries that will sue you if something goes wrong.

One question — and this is important.  Does your E&O cover you for this role?  I suggest you check. Your coverage most likely requires you to work in your “professional capacity,” which may not include acting as trustee.

And if you have any questions, please do not hesitate to reach out to me.

 

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Free Book For Wealth Advisors

Michael put the knowledge gained from working with Fiduciaries and Wealth Advisors on thousands of life insurance policies into his first book, The Wealth Advisors Guide to Life Insurance.

An easy to read book, it provides Wealth Advisors with a background in life insurance and outlines the process for the proper selection, use, and management of life insurance.

If you are a Trustee, Attorney, CPA, Family Office or Fee-Based Advisor, Michael is offering you a free copy of the book for a limited time.

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