What does The PenFacs Group do to improve a Trust Department’s due diligence?

• The PenFacs Group will provide insurance product reviews, recommendations, and required replacements, deletions, or additions of insurance products in conjunction with client needs.
• The PenFacs Group professionals will work with Trust department professionals and its clients for regular and proper due diligence of insurance related products as part of the clients portfolio or estate plan.
• The PenFacs Group professionals include individuals with designations such as CLU, ChFC, CFP and CASL.
• The PenFacs Group has many years of experience operating insurance agencies.
• PenFacs Group’s professionals will meet with clients and, if desired, the client’s advisors to conduct reviews and present recommendations.
• The PenFacs Group’s management team would be happy to meet with Trust Officers to arrange a business structure that works best for the Trust Department, its clients, and the PenFacs Group.

Why does it make sense for Trust departments to work with the insurance professionals at The PenFacs Group?

Situation: Recently, several changes and events are affecting Life Insurance in Irrevocable Trusts. These events include:

1. Changes in the estate tax rates, rules and regulations.
2. Changes in Estate values due to equity valuations and market conditions.
3. Potential and current fluctuations in non-guaranteed premiums which will be a burden to the trust and the estate holders.
4. The availability to sell life insurance policies owned by a trust to raise cash before the death of the insured.
5. Premium reductions in guaranteed cost life insurance as compared to old styled permanent, universal, or survivorship policies.
6. The availability of low interest loans that can be used to pay life insurance premiums while providing an exit strategy prior to death or at death.

Problem: How do Trust departments cost effectively and diligently review and manage life insurance within the trust administered or managed by the trust department?

Objective: To engage a firm that can cost effectively and diligently review and execute recommendations that will improve the performance and effectiveness of life insurance within a trust, or facilitate the sale of any insurance to help fund trusts before death.

Concerns & Considerations: There are very few facilities that have the experience required to meet the objectives. Some have the experience and knowledge in purchasing life insurance in the form of secondary guaranteed universal single and survivorship life. Others have the experience of selling policies through the use of viatical or senior settlements. Very few firms have the ability and experience in both buying and selling life insurance policies owned by Irrevocable trusts.

As Trustees there is a continuing fiduciary responsibility to the client and beneficiaries which requires a regular review of the policies and the funding sufficiency of these policies. Each Trustee should have a policy for regular and diligent review. Irrevocable trusts, funded with life insurance, must mature before or at death with cash for the trust to be funded for cost effective trust management.

Solution: Retain the services of The PenFacs Group to complete a cost effective and diligent review of policies held in trust. During the regular review of the trust, an in-depth analysis of the policies will be conducted. All options available will be considered including:

• The solvency ratings and issues with the current carrier
• The length of time that the current policy will last based on the projected and guaranteed elements of the policy.
• The affect of dividend, premium, and/or face amount changes have on the policy duration.
• Pricing on alternative insurance policies given the client’s situation.
• The availability and viability of borrowing money to pay premiums.