An irrevocable life insurance trust may have many estate planning benefits when drafted and administered properly. Trustees in North Carolina are urged to be aware of their fiduciary duties, which means that their administrative actions must be in the trust beneficiary's best interests. They must also be sure that it is administered in accordance with the relevant trust provisions.
Trustees should always keep their own property separate from property owned by the trust. A separate bank account is required for the trust, and those administering it should be sure to keep good records of all financial transactions made. This may include keeping copies of checks and wire transfers. Someone must be willing and able to review the performance of any investments made by the trust. This can be done by the trustee or through the life insurance provider.
Independent companies may also be available to monitor investment performance. It is a good idea to have written confirmation from a life insurance company that the trust is named an owner and beneficiary of any policy that it owns. Although it may seem like common sense, trustees should make plans to pay premiums on time and without relying on any available grace period. This is because the performance of a trust may be impacted by making late payments.
An irrevocable trust generally cannot be changed or terminated without the permission of several parties. Therefore, it may be wise to talk with an attorney before creating one. As part of the trust creation process, it may worthwhile to name both primary and alternate trustees. This may ensure that someone is available to fulfill the role if the intended or current trustee is unable to do so properly.