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7 Reasons To Have A Professional Help You Build,
Manage and Protect Your Wealth
1. What is a
corporate trustee?
2. 7 Reasons To Use A Corporate Trustee
3. When would I use a Corporate Trustee?
4. As Trustee
5. As Co-Trustee
6. As Investment Agent
7. As Successor Trustee
8. Couldn't I name a relative or friend
instead?
9. Do I lose control if I use a corporate
trustee?
10. How safe are trust assets?
11. Should everyone use a corporate
trustee?
12. Are there any disadvantages to using
a corporate trustee?
13. Is a corporate trustee expensive?
14. How can I evaluate a corporate
trustee?
15. Could a Corporate Trustee Help You?
Look at These 17 Real-Life Situations
1. What is a corporate
trustee?
A corporate trustee is a bank trust department or trust
company. They can help you build, manage and protect
your wealth when you put your assets in a trust.
A trust is simply a legal document that lets
you reduce unnecessary legal fees, save taxes and keep
control over your assets while you are living, if you
become physically or mentally incapacitated, and after
you die.
When you set up a trust, you need to name
someone (a trustee) to manage the assets your trust
controls. While you can choose just about any adult,
there are very good reasons why you should consider a
corporate trustee.
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2. 7
Reasons To Use A Corporate Trustee
1. You'll gain the advantage of years of experience.
Because they manage trusts on a daily basis, they are
familiar with all kinds of trusts, tax and estate
planning strategies, and the legal responsibilities of a
trustee.
They can manage the assets in your trust now
and/or after you die as your trust directs--buying and
selling assets, paying bills, filing tax returns,
maintaining accurate records, and distributing income
and assets. Most have experience with all kinds of
assets, including stocks and bonds, real estate, farms,
closely held businesses, mineral properties,
international investments, and collectibles.
2. You'll enjoy the potential of even greater
investment returns.
Corporate trustees give their full attention to managing
trust assets – that's their job. And because their staff
collectively has more experience and resources than an
individual, they often achieve better results.
After discussing your financial goals, risk
tolerance and long-term objectives with you, they will
recommend the best investment strategy for you. Then,
depending on how involved you want them to be, they can
provide ongoing advice, or even make decisions for you,
to make sure your investments stay on track to reach
your goals.
3. You'll protect your wealth because corporate
trustees are regulated by both state and federal
agencies. Also, most courts consider them "experts" and
expect them to meet higher standards than a
nonprofessional.
4. You'll receive reliable, professional
service.
A corporate trustee won’t become ill or die, get
divorced, go on vacation, move away or be distracted by
personal concerns or emotions (as an individual might).
5. You'll value their objectivity.
They will follow your trust instructions objectively and
faithfully, something family members are often unable to
do.
6.
You'll tap their rich sources of advice and referrals.
They routinely provide advice on investment, tax,
retirement and estate planning issues, and can refer you
to attorneys and other qualified professionals as
needed.
7. You'll enjoy peace of mind.
Knowing you have selected someone with experience and
integrity to manage your financial affairs now and/or
when you are no longer able to do so yourself can be
very reassuring.
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3. When
would I use a corporate trustee?
If you set up an irrevocable trust (like a charitable or
life insurance trust) or you plan to make gifts in trust
-- strategies often used to save estate taxes by
removing assets now from your taxable estate -- you will
probably need to name someone other than yourself as
trustee for tax reasons. A corporate trustee is a
natural choice to make sure your irrevocable trust is
administered properly.
If you set up a revocable living trust – which
will avoid probate when you die and prevent court
control of your assets at incapacity -- you can be your
own trustee. Even so, there are many benefits to having
a corporate trustee involved. They can assist you in
several ways...
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4. As
Trustee
As trustee, a corporate trustee has full responsibility
for managing your trust assets according to your
instructions.
This would be an excellent choice if you are
elderly and have no one you can trust to take care of
your financial affairs. You may be widowed, have no
children or other trusted relatives living nearby (or
don’t want to burden them), or you and your spouse may
be in declining health.
Even if you are capable of managing your own
trust, a corporate trustee can be a wise choice. You may
not have the time, desire or investment experience to
manage your trust yourself. Or perhaps you just feel
that someone with more time and experience could do a
better job than you.
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5. As
Co-Trustee
If you want to take advantage of a corporate trustee's
investment experience but still be involved, you could
have one work with you as co-trustee. Developing a
working relationship with a corporate trustee now lets
them become familiar with your objectives, your trust
and your beneficiaries' needs and personalities while
you are around and able to provide guidance and input.
It would also let you see how they would
perform in your absence, let you evaluate their
investment performance and service, and let you see how
comfortable you feel with them overall – a kind of
"trustee test drive."
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6. As
Investment Agent
You could also name a corporate trustee as agent. While
a co-trustee has equal responsibility with you (usually
both signatures are required to transact business), an
agent can have as much responsibility as you wish.
You can have an agent manage only a portion of
your trust’s assets (your stocks and bonds, for example)
or just provide you with investment advice, with you
making all final investment decisions.
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7. As Successor Trustee
If you decide to be your own trustee (for example, of
your revocable living trust), consider naming a
corporate trustee as your successor trustee. In this
capacity, they will step in and manage your trust for
you when you can no longer act due to incapacity or
death. Many people like the idea of having a
professional take care of the paperwork, tax filings and
other final details.
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8. Couldn't I name a relative or
friend instead?
You could, but keep in mind that family and friends are
not always a good choice to be involved with your trust.
They may be too busy with their own affairs,
may reside in a distant area, may not get along with
other family members, or may not be responsible or
experienced enough to manage the trust assets. An
innocent error by a well-meaning but inexperienced
relative or friend could negate your careful planning
and cost your beneficiaries thousands of dollars.
One option is having a relative (perhaps one or
more of your adult children) and a corporate trustee
work together. This would give you the professional
experience and objectivity of a corporate trustee and
the personal involvement of someone who knows you.
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9. Do I
lose control if I use a corporate trustee?
Not if the trust is done right. With most trusts, you
can change your trustee at any time if you aren't
satisfied. Even with an irrevocable trust, you or your
beneficiaries can have the right to change the corporate
trustee.
Also, the trustee you select must follow the
instructions you put in your trust – while you are
living, if you become incapacitated, and after you die.
That's because a trust is a binding legal contract, and
your trustee can be held liable if he or she doesn't
follow your instructions.
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10. How
safe are trust assets?
Even if a bank or trust company fails, trust assets are
safe. By law, trust assets must be kept separate from
all other assets. For example, they cannot be loaned
out, mixed with the corporate trustee's own assets or
used to satisfy its creditors. Because of these
safeguards, trust assets do not need to be insured by
the FDIC.
You are also protected against fraud, theft
(for example, if an employee takes trust assets and
disappears), or if they make an error administering your
trust. But, of course, there is no insurance or bond
that will protect you if your assets lose value simply
due to a decline in market values.
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11.
Should everyone use a corporate trustee?
No. But many more people should consider one. Most
people are just not aware of the many benefits a
corporate trustee can offer them and their families.
You need to look objectively at your situation
and the type of trust you set up. If you have a modest
estate and your trust is fairly simple, you may be fine
being your own trustee and having a capable family
member step in for you when you can no longer manage
your trust yourself.
But if your estate is larger, has a variety of
assets, includes tax planning, or if you doubt your
relatives' capabilities or intentions, definitely
consider a corporate trustee.
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12. Are
there any disadvantages to using a corporate
trustee?
Because they must objectively follow the instructions
for the trusts they manage, some beneficiaries
(especially those who want the money now instead of when
the trust states) have found them to be uncooperative.
But that may be exactly what you want. One
reason why many trusts are set up, and a corporate
trustee chosen, is to keep a beneficiary from getting
the money until Mom and Dad (or whoever set up the
trust) intended.
However, if you are concerned about a corporate
trustee being too "impersonal," you can always name a
family member or close friend to act with them as
co-trustee.
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13. Is
a corporate trustee expensive?
Most are very reasonable, especially when you compare
their fee to the costs of paying others for estate and
tax planning advice, for investment management, for
preparing tax returns, and for investment trading
commissions.
A corporate trustee typically provides all
these services and more for only a small percentage of
the value of the assets they manage for you. (Fees are
published, so you can find out what they are.) And
because their compensation is based on how much those
assets are worth -- instead of how many trades they make
for you -- a corporate trustee is motivated to help your
assets grow.
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14. How
can I evaluate a corporate trustee?
Talk to several. Visit them if you can. Ask how long the
trust department has been in business, how many trusts
they manage, minimum and average size of trusts they
manage (most require a certain amount of assets) and how
much experience their people have in the trust business.
Compare investment returns, fees (including
when and how much the last increase was), and services.
Ask to see samples of statements or reports you would
receive and see how easy they are to understand.
Facts and numbers are important, but so are the
people. Do they seem to care about you and your family?
Do they listen and understand your concerns? Can you
understand them? How comfortable are you that they will
be there for you and your family when you need them?
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15.
Could a Corporate Trustee Help You? Look at These
17 Real-Life Situations:
Building Wealth with Professional Asset Management
• My spouse took care of all our investments. Since he
(she) died, I don't know what to do or whom to trust.
• I don't know where I should invest my money. I'm so
confused by everything I read.
• I just received a large inheritance. I've never had to
invest this much money before.
• I travel a lot now (business or pleasure) and I don't
have time to manage my investments like I used to.
• I recently sold my business (or other assets). Now I
just need to figure out how to invest my money.
• I just received a large settlement from a lawsuit,
divorce, etc.
Wealth Protection with Retirement/Estate
Planning
• I'm retiring soon. I'm not sure how I should take
distributions from my IRA and other plans.
• I'm a business owner/professional and I'm wondering
what my options are for retirement plans.
• I'm changing jobs. Should I take a lump sum
distribution from my current retirement plan?
• I want to avoid probate and save estate taxes.
Smooth Settling of an Estate
• I'm executor/personal representative of my father's
estate (trustee of my father's trust). I don't know what
I'm supposed to do or how to do it.
Peace of Mind at Incapacity
• I worry about what will happen to me and my money if I
become mentally or physically incapacitated.
• I'm concerned about my mother (father). I don't have
the time to help her with her finances, and I'm worried
she might be taken in by some scam.
Caring for Loved Ones/Gifts
• One of my children is not responsible with his own
money. I shudder to think what will happen to his
inheritance—my money—after I die.
• I want my children to be responsible and
productive—not spoiled or lazy from a large inheritance.
• I'd like to make gifts to my children and
grandchildren to save estate taxes.
• I have a child with special needs. I worry about what
will happen to him when something happens to me.
• I'd like to make a large gift to a charity.
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NOTE: This information is designed to provide a
general overview with regard to the subject
matter covered and is not state-specific. The
authors, publisher and host are not providing
legal, accounting or any other advice which
purports to be specific to your situation. The
contents of this website are believed to be
completely reliable. Nevertheless, some material
may be affected by changes in the laws or
interpretations of such changes since the
material was entered on the website. If legal
advice or other expert guidance is required, the
services of a competent professional in the
field of law, accounting, insurance or
investments should be sought.
Price
& Farrington, PLLC - Attorneys and Counselors at
Law
Parkwood Office Center - 2370 130th Ave. N.E., Suite
103 - Bellevue, WA 98005
Phone: 425.451.3583.. Fax:
425.452.0153 ..E-mail: contact@pricefarrington.com
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