Trustee
What Does Trustee Mean?
A trustee is a third party legally responsible for managing a trust and distributing its assets according to the grantor’s instructions. Trustees are often financial institutions, such as banks. In the context of insurance, trustees are commonly used to manage life insurance trusts, where the primary asset of the trust is a life insurance policy.
Insuranceopedia Explains Trustee
Many people set up life insurance trusts because they are often exempt from estate taxes. This allows the death benefit from a life insurance policy held in a trust to provide a larger amount to beneficiaries compared to one outside of a trust. By utilizing a trustee’s services, a policyholder can maximize the amount passed on to their beneficiaries. However, to qualify for the estate tax exemption, the life insurance trust typically needs to be established at least three years prior to the policyholder’s death.