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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Estate Law
Satisfied Customers: 115462
Experience:  Experienced in Trust and Succession Law, including Louisiana Laws
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LEGAL OWNERSHIP of LIFE INSURANCE My father formed THE

Customer Question

LEGAL OWNERSHIP of LIFE INSURANCE
My father formed THE MCCLINTOCK 2005 IRREVOCABLE TRUST and put 6MM worth of OLD L.I. policies into it. It has 2 beneficiaries. My sister and I.
Some of these policies received "split dollar" loans by his company. The "split dollar" contract reads that split dollar stops when he resigned a few years ago.
The VALUE is 2M and the premiums are $140K, so no need to pay premiums.
His trustee, without asking the beneficiaries JUST reassigned ownership of the policies to dad's old company entity WITHOUT alerting him, or the two beneficiaries.
I think its because the trustee made a mistake and kept on paying the premiums from the company, even-though the Values are there to cover the premiums. He pulled in half of the policies to cover his mistake. I have put MetLife on alert that he might try cashing in a policy or two without our permission.
In the state of Texas, Doesn’t he have to get a signature from my father, myself or my sister?
Dad says "HELL NO, but MetLife just transferred ownership of 3M anyway.
ANY LAWS I can send to them requiring sign off...OR is any man/trustee able to simply rename the policy owners to any company or person he wants?
Submitted: 1 year ago.
Category: Estate Law
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
Under Texas trust law, the trustee has the right to control and make decisions for the trust without the grantor or beneficiaries consent. They have sole control unless the trust itself specifies they do not. So as trustee, he can control anything put into the trust. If the life insurance policies are now owned by the trust he has the right to manage them and do as he deems necessary for the best interests of the trust as a whole.
So the Trustee has sole discretion unless the trust document says otherwise. Also, if the trust provides, the grantors of the trust can remove the trustee.
If the trustee has breached their fiduciary duty to the trust to cause damage to the trust, then the trustee can be sued by the grantor and beneficiaries of the trust for the damage they caused. They must exercise reasonable business judgment, which means that even though they do not make good decisions, as long as they are reasonable business decisions then they have not breached their duty to the trust.
So you need to refer to the trust document to see if any of the trustee's powers are limited by the trust or if there is a removal of trustee provision in order to deal with this. If he has breached his duty through negligence, then you can pursue him on those grounds.
See Texas Trust Code: http://www.statutes.legis.state.tx.us/Docs/PR/htm/PR.113.htm
Customer: replied 1 year ago.
Above is what the TDI said also.
What I need is a few TEXAS CASES in which the court rulled in favor of a beneficiarry OVER any type of Slit Dollar contract.
Ex Dad's split dollar ended in 2005 with his retirement, but the trustee still wants to take 85% Life Insurance money away from the 1st beneficiary (me) to pay CASH back the the company as a "Loan"
Split Dollar agreements are not set up to be paid back to the company!
Any Tx cases that are vague will do. Id like to overwhelm the OC with loads of cofusing expensive documents to read as ONE of my 4 pronged strategies

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