Although they aren’t for everyone, a trust company can provide a variety of investment, tax and estate planning services for their customers. Wealth Advisor’s recent article, “Understanding How Top Trust Companies Operate,” gives us a high-level overview of the nature and function of trust companies, as well as the services they provide.
A trust company is a separate entity owned by a bank or other financial institution, or in some cases by a law firm or other professional. It can manage trusts, trust funds and estates for individuals, businesses and other entities. In most cases the assets are held in actual trusts, with the trust company named as the trustee. They typically use several types of financial professionals, including financial planners, attorneys, portfolio managers, CPAs, and other tax professionals, trust officers, real estate experts and administrative personnel to effectively manage the assets.
Trust companies perform a wide variety of services related to investment and asset management. Most companies manage the investment portfolios within the trusts of their clients, however some prefer a client’s financial advisors do so instead. There’s also a variety of investments, such as individual securities, mutual funds and real estate, that can be employed to achieve growth or income. They also can provide safekeeping services within secure vaults for other types of tangible investments or valuables, like jewelry, and occasionally for important documents, such as an original will or trust. They also take full fiduciary responsibility for their clients’ financial well-being. This means that the clients’ best interests are always considered in each service and transaction performed. See here for a fuller list of areas where a professional fiduciary may be utilized. https://www.galliganmanning.com/practice-areas/estate-planning/
Most clients use trust companies for estate settlement services, either as the executor or a trustee. They can perform such tasks as valuation, dispersion and re-titling of assets, payment of debts, and expenses, estate tax return preparation and the sale of closely held businesses. Trust companies frequently work with their clients’ heirs to provide the same types of services to the estate assets’ recipients as to the donor.
Trust companies aren’t for everyone, but serve a vital role in some estate plans. They are especially useful where there are likely to be family disputes, disabled or very young beneficiaries, or in some cases, where a client doesn’t have someone they feel comfortable putting in charge of their estate. Most clients who want to use a professional trustee must meet certain financial requirements, usually including at least a certain net worth, but for clients with these concerns, it’s worth it. See Kevin’s Korner for more ideas on how to pick your fiduciaries. https://youtu.be/W2LjFQFmY_I
If you expect to avoid family disputes in your estate, have young or disabled individuals or don’t have someone suitable, you should consider the use of a trust company in your estate plan. Please contact our office for a free consultation to discuss how a professional fiduciary can help you achieve your goals.
Reference: Wealth Advisor (December 10, 2019) “Understanding How Top Trust Companies Operate”