A New York resident who is appointed trustee of an irrevocable life insurance trust has a number of duties and responsibilities. Above all, a trustee has a fiduciary duty, and this means there is a legal obligation to administer the trust competently for the benefit of the beneficiaries. The trustee must also manage trust investments. This may involve assistance from life insurance producers or from companies that review policies’ performances. Other duties including safeguarding original policies, confirming that the ILIT is the policy owner and beneficiary, and making sure communications with insurance companies go to the trustee.
It is necessary for the trustee to have a bank account for the ILIT that is separate. Documenting all activity may be wise. Premiums must be paid on time, and this could be a more complex process if the premiums are not paid from the trust property.
If the trust involves what is known as split-dollar arrangements, the trustee must manage these. It might be necessary to use legal counsel in order to produce compliance audits every two to five years. Finally, the trustee must follow the requirements of the governing trust instrument in putting together reports and annual accounts for beneficiaries. The trustee must also file tax returns.
Whether a person is appointed as a trustee or as the executor of a will, working with an attorney may be helpful. An executor in particular is not expected to be an expert on legal and financial matters but still has certain obligations to the estate and beneficiaries, and an attorney may be able to guide the person through this process. A person who is preparing an estate plan might also want to discuss this process with an attorney in order to get a sense of who best to appoint for the position.