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
12501 Bellevue-Redmond Road, Suite 215 ....Bellevue,
Washington 98005
Phone: 425.451.3583.. Fax: 425.452.0153 ..E-mail: contact@pricefarrington.com
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