Glossary

Trustee

The person or institution that holds legal title to trust assets and manages them for the beneficiaries under the trust's terms and fiduciary duties.

Also called: successor trustee, co-trustee

A trustee is responsible for running a trust: holding its assets, investing them prudently, keeping records, filing tax returns and making distributions according to the trust document. A trustee can be an individual, such as a family member or friend, or a professional, such as a bank trust department or trust company. Trustees owe fiduciary duties of loyalty and care to the beneficiaries.

In life insurance planning, a trustee often owns the policy or receives the death benefit. With an irrevocable life insurance trust (irrevocable life insurance trust), the trustee applies for or holds the policy, pays premiums from gifts, sends Crummey notices to beneficiaries, files the death claim and manages the proceeds. With a trust named as beneficiary, the trustee collects the payout and follows the instructions for each beneficiary. Hypothetically, a trustee might hold $1 million in proceeds for two children, paying for tuition and health costs and distributing the rest at age 35.

Choosing a trustee matters as much as drafting the trust. Consider reliability, financial skill, fairness between beneficiaries and age, and whether a professional's fees are worth it. Name a successor trustee too. See irrevocable life insurance trusts and naming a trust as your life insurance beneficiary.

Last reviewed October 4, 2026

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Related terms

Irrevocable life insurance trust (ILIT) A trust that owns life insurance and can't be changed or revoked by its creator, keeping the death benefit out of the insured's taxable estate. Revocable living trust A trust you create and control during your life that can hold assets or receive life insurance, then distribute them after death without probate. Testamentary trust A trust written into a will that comes into existence only after death and probate, often to manage money for minor children. Fiduciary A person or firm legally bound to act in someone else's best interest with loyalty and care, such as a trustee, executor or registered investment adviser. Special needs trust A trust that holds money for a person with a disability without disqualifying them from means-tested benefits such as SSI and Medicaid. Crummey letter A written notice telling a trust beneficiary of a temporary right to withdraw a new contribution, so the gift qualifies for the annual gift tax exclusion.

Related guides

Why naming your estate as beneficiary is usually a mistake Naming your estate as life insurance beneficiary sends the money through probate and exposes it to creditors. When it still makes sense, and the alternatives. How to choose a life insurance beneficiary Who to name as a life insurance beneficiary, how to split shares, and when a trust or custodian beats naming a child or your estate. Includes a checklist. Irrevocable life insurance trusts (ILITs) An ILIT owns your policy so the death benefit stays out of your taxable estate. How it works, Crummey gifts, the three-year rule, costs and who needs one. Life insurance in blended families Stepchildren are not automatic heirs. How beneficiaries, trusts and separate policies can protect a new spouse and children from earlier relationships. Life insurance for caregivers Family caregivers carry unpaid work and dependents. How to size coverage by the cost of replacing your care, pick a policy and protect the person you care for. Life insurance for grandchildren Grandparents can insure a grandchild or insure themselves and leave proceeds to grandchildren. Rules, taxes and trade-offs of each approach.