A trust is a legal agreement in which a grantor transfers legal title of property to a trustee, who then manages the property for the benefit of the grantor or another beneficiary. A grantor is the person who creates the trust. A trustee can be a person or a corporation. A trustee will hold, manage, and eventually distribute the assets to a beneficiary as directed by the provisions of the trust agreement.
A corporate trustee prudently invests trust funds for the maximum benefit of a trust. A corporate trustee can invest in institutional funds, whereas an individual trustee can only invest in retail funds.
State and federal laws strictly regulate corporate trustees. Therefore, a corporate trustee must act in the best interest of the trust. A corporate trustee insures that all of the trust records are accurate and current, and will supply you with detailed reports of the trust’s activity.
Trustees must comply with ever-changing legal requirements and fiduciary standards. Trustees are legally accountable to grantors and /or beneficiaries for the investments and administration of a trust. Corporate trustees are well versed in the legal nuances of a trust and will help a grantor avoid potential pitfalls.
A corporate trustee is independent of all family or friend bias eliminating potential family conflicts and beneficiary inequality.
Trusts can be difficult to administer and may be very time consuming. A corporate trustee’s responsibility is to ensure that grantor and beneficiaries’ needs are met. A friend or family member may not have the necessary time to appropriately administer the trust.
A corporate trustee’s job will never lapse due to illness, new job, moving, or other common life situations. Additionally, a corporate trustee can provide stability and uniformity from generation to generation.
A partial lapse in confidentiality can lead to unnecessary misunderstandings and conflicts among friends and family. A corporate trustee is committed to protecting personal and financial information.
A corporate trustee is experienced in tax aspects of a trust and can provide advice concerning income, gift and estate taxes. A corporate trustee is skilled at issuing tax reports and will file the fiduciary income tax return for the trust.
A corporate trustee can act alongside an appointed individual or family member as a co-trustee. A co-trustee must act in consultation with the other trustees to ensure the requirements of the trust are exercised. This arrangement offers an additional, non-biased interpretation and execution of the trust agreement.
A friend or family member may not charge for administering a trust but may need to hire professionals such as a CPA or investment advisor to properly administer the trust.
A revocable trust, also referred to as a living trust, is an instrument used to manage your assets during your lifetime and at death. You are both the creator and the beneficiary of the trust (during your lifetime) and you are often the initial trustee, although Trust Point, in its role as a professional corporate fiduciary, also acts as an initial trustee. A revocable trust may be amended or revoked. And as with a traditional will, you provide for the disposition of your assets at your death, either outright to your beneficiaries or in the trust for their benefit. Read more on our resource page on this subject here
There are several trusts out there to choose from. So how do you choose the right one for your needs? Some of the factors that will help you to determine if you should create a trust include the extent of your wealth, the risks to your assets, who you are leaving an inheritance to, and the needs of your heirs or beneficiaries. To create a long-term plan, we invite you to reach out to the experienced team at Trust Point. We will go over your options to help ensure your goals are met. More information on Trusts, can be found here.
An advisor who specializes in trusts can offer expert insight to help you identify opportunities to mitigate or balance your risk so you can preserve and grow your wealth, and protect your family in case the worst happens.
• KYC and AML rules are now common place, and over time will only become stricter
• Having undeclared assets will become harder, and if abroad it will become almost impossible to repatriate them over time
• Unsophisticated tax planning and estate planning techniques will be disregarded, nominees will no longer exist, controlled trust management will be transparent
• Confidentiality is an illusion, transparency is the ‘new normal”.
• We are in the company management/TRUST business, long term relationships, often passing to next generation(s), no trust, no business • Greed (Madoff, Credit Suisse, HSBC) ultimately leads to disaster, relationships build business, create revenues, success • Only mutually rewarding relationships lead to stable success • Not only God sees everything, soon also the revenue collector • A good night’s sleep is worth a lot, better be ahead of the wave than be swallowed up by it
• Less trust in banks, money moving into private equity funds and other smaller asset pools, banks more for execution only
• More family offices, having own allocation rules and trusted professionals, strong governance to deal with generational transition issues and keep the family business together, managed by professionals
• Only families that have strong shared values stay together over multiple generations (see Tata)
• Spreading assets over multiple locations, multiple asset classes
• Eliminating ‘nominee ships’, ‘bearer shares’ and other vague “planning” methods, which may lead to tax evasion and problems for the next generation
• More investments in projects that build family values.