Whether life insurance is owned by a life insurance trust, family trust, charitable remainder trust, or any other type of trust vehicle, trustees have the ability to determine the value of a life insurance policy in the secondary market. As the secondary market continues to grow, increasing numbers of trustees are looking into the life settlement option as a means of accomplishing trust goals and meeting beneficiary needs.

As the insured ages, premiums increase dramatically. Often those premiums will become prohibitive for the trust to maintain. Before life settlements entered the financial landscape, many trustees found themselves in the difficult situation of possibly surrendering or lapsing a policy – obviously not what the grantor originally intended. However, as the times and financial health of individuals change, a life settlement may become the best option available.

With the knowledge that the beneficiaries will ultimately profit from the settlement proceeds, trustees should carefully analyze their specific scenario and determine if an evaluation is appropriate.

Some reasons a trust may want to consider a life settlement include:

• The premium payments are no longer affordable
• The goals of the grantor or beneficiaries of the trust have changed, and the insurance policy is no longer needed
• The policy was purchased several years ago and is not performing as expected, and the trustee needs to replace the insurance
• The estate size has decreased or tax laws have changed, reducing the amount of insurance required to pay projected estate taxes
• The estate size has grown and the initial policy no longer meets the requirements of the estate planning needs
• The grantor has outlived the beneficiaries of the trust
• Other trust assets need to be maintained, and the sale of a policy may help the estate retain more valuable assets

Cash received in from a settlement may be disbursed to:

• Fund other goals of the trust
• Purchase a new paid-up life insurance policy
• Fulfill charitable giving wishes

Whatever the reason, Brookwood Settlements utilizes its considerable resources and deep knowledge of the life settlement industry to help trusts realize the full market value of their policies.