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Are You Questioning the Actions of Your TOLI’s Trustee?

July 6, 2017

When your loved one died, he or she may have made you the beneficiary of a trust whose assets consist of one or more life insurance policies. Your loved one probably intended that the trust would provide for you for a long time. He or she trusted that the person appointed to serve as trustee would manage the policy in such a way that makes that wish come true.

The more time that goes by, however, you may suspect that the trustee may not take his or her responsibilities to you and the assets seriously or may not properly understand how to manage the trust. You may wonder whether the faith of your loved one in the trustee was misplaced.

The trustee’s duty to you

As beneficiary of the trust, the trustee has certain duties and responsibilities to you. Management of the trust’s assets must comply with your wishes, not the wishes of the loved one who created it. This could prove challenging if you and the trustee did not meet prior to the death of the trust’s creator. The trustee may make certain assumptions based on his or her discussions and relationship with the decedent that are contrary to your desires.

As for managing the assets in the trust, the trustee must ensure that the assets perform as well as possible. This could mean replacing or updating the policy when needed in order to maximize your benefits from the trust.

The trustee breaches that duty

It’s possible that the trustee lacks the knowledge or skills to appropriately manage the assets of the trust. Even if the trustee is a professional, such as an accountant or attorney, that does not guarantee proper management of the assets in a trust. Unfortunately, you may need to keep track of the policy’s performance yourself in order to ensure that it performs well. Some questions you may ask include the following:

  • What is the current status of the insurance company’s rating?

  • Would a different policy meet your expectations and comply with the trust’s provisions?

  • When did the last review of the policy take place?

  • Is the policy’s performance in line with your expectations?

If you ask the trustee these questions and do not receive adequate responses, or you receive no responses at all, you could have a problem. Sadly, a simple lack of knowledge could be the least of your worries. Some trustees are less than honest when it comes to the assets in the trusts they administer.

So what can I do about it?

The trustee should diligently serve your interests. When that does not happen, the trust may contain a mechanism to replace the trustee, but that will not repair the damage already done. You may need to consider litigation against the trustee in a New York civil court for breaching his or her duty to you. If this is the case, you may find that you need help to recover your losses.