Veralytic (under its original name THEInsuranceAdvisor.com) was featured in the February 15th, 2007 issue of the AICPA Wealth Management Insider – an electronic newsletter reaches a weekly readership exceeding 200,000 CPAs. This AICPA article talks more about the evolution of the life insurance industry from a “manufacturers-rep” business where insurance advisors generally represent some limited number of insurers into a portfolio management business where insurance advisors are truly... [more]

The adoption by most states of the Uniform Prudent Investor Act (UPIA) has far-reaching effects on trust drafting and administration. One of the often overlooked consequences of the Prudent Investor Act is its effect on the administration of irrevocable life insurance trusts (ILITs). This article will address the unique (and often opaque) nature of life insurance as an investment and the effects the Prudent Investor Act can have on trustee ownership of life insurance. Part 1 - The Prudent... [more]

Stranger-Originated Life Insurance (STOLI) is best thought of as a "mortality futures" transaction where certain parties have one expectation as to the future value of the article of trade that is the subject of the “futures contract”, while other parties have a different expectation as to the future value of that article of trade.  In a STOLI transaction, the article of trade that is the subject of the “futures contract” is the life expectancy or mortality of the insured.  While current... [more]

One of the most overlooked consequences of the Uniform Prudent Investor Act (UPIA) is its effects on the administration of irrevocable life insurance trusts (ILITs). The trustee's duty to appropriately select, purchase, and monitor the insurance product that is often the ILIT's only asset has been brought to light by UPIA, and should be of concern to ILIT trustees. A trustee has to obtain the needed data and determine the strengths and weaknesses of a given policy, then the trustee will be... [more]

A case in which the Grantor to an ILIT sued the trustee for breach of fiduciary duty, and while the Court dismissed the case because the trustee does not have a fiduciary duty to the Grantor (i.e., the trustee’s duty is to the Beneficiaries), the court did NOT dismiss for lack of cause. Click here for access to the case report. [more]

The April 2003 issue of Financial Advisor magazine cites one of many cases in which lawyers retained by the beneficiaries of an Irrevocable Life Insurance Trust (ILIT) successfully sought damages based on the trustee’s failure to investigate other products from similarly rated insurers, but which offered lower policy expenses, and this could have provided the beneficiaries with greater death benefits.  Because these cases have been settled out of court, they do not create legal... [more]

A recent appellate court decision in New York allowed a trust fund to bring a claim for the profits it would have earned if its account had been invested so as to track the S&P 500.  Given this precident, little imagination is needed to foresee how ILIT trustees will be liable ILIT to trust beneficiaries for the difference between death benefits actually received versus the death benefits that “should have been received” under the Uniform Prudent Investor Act (UPIA) unless suitability is... [more]

Another appellate case from California in 1990 awarded a significant judgment against the trustee for investing primarily in bonds where the appellate court was left to decide whether to use the S&P 500 of the bank’s proprietary equity fund to measure appropriate damages.  Again, such precedent from the world of investment trusts gives beneficiaries (and trial lawyers) clear parallel case law to seek damages from trustees for the difference between death benefits actually received versus... [more]

A Washington State appellate court decision from 1986 found Corporate Fiduciary was liable for not considering equity investments and instead investing exclusively in bonds and real estate.  Damages were assessed based on the premise that at least a 40 percent of trust assets should have been invested in equities.  Again given this precedent, little imagination is needed to foresee how Irrevocable Life Insurance Trust (ILIT) trustees will be liable to trust beneficiaries for the difference... [more]