Bank and Trust Services

Corporate Trustees and Their Role in the Estate Planning Process

Corporate Trustees play an integral role in the estate planning process. Most banks have a Trust Department, whose team of professionals will work with an individual, his attorney, and accountant in drafting a proper estate plan for the client, and can serve as Representative for an Estate, or Corporate Trustee for a trust. The Trust Department is comprised of both Trust Administrators and Portfolio Managers, who have the legal and technical knowledge required to administer trusts and estates, and manage the investment portfolios. Most of these professionals have a business degree, possibly an MBA or a law degree as well. Many are Trust School graduates and may possess additional accreditation, attained by passing a stringent exam to become a CTFA (Certified Trust and Financial Advisor), or a CFA (Certified Financial Analyst).

Once the clients’ financial and personal situation is reviewed, there are various legal techniques and tax strategies that can be incorporated into their estate planning documents that will minimize taxes, handle special situations and provide for various beneficiaries. Some concerns that a client may have are providing for a current spouse and also for children from a previous marriage, creating a trust for a loved one with special needs, protecting assets from creditors, leaving a legacy to a favorite charity, and minimizing all transfer taxes, (estate tax, generation-skipping tax and gift tax).

A comprehensive set of estate planning documents will carry out the client’s objectives. Many clients may already have a simple will, but by creating a Revocable Trust Agreement (effective during their lifetime), or an Irrevocable Trust (effective after death), they can take advantage of opportunities to save under the current tax law.

When attorneys draft an estate plan for their clients, it is crucial to select a Personal Representative/Trustee who is knowledgeable and equipped to handle the various responsibilities involved in administering the estate/managing the trusts:

Interpret legal documents and ensure all provisions are carried out. Collect and protect all assets, then construct and manage an appropriate investment portfolio. Select investment objectives, and asset allocations. Distribute income and make discretionary payments or partial distributions of principal to the respective beneficiaries. Prepare and file all necessary tax returns, and provide statements and accountings as required.

It is often beneficial to select a Corporate Trustee to act, instead of a friend or family member. They are insured in case there any liability arises. Discretionary decisions are handled by a committee, which follows established procedures and guidelines, to ensure an unbiased opinion results. Many times, an individual will select a family member to act as Co-Trustee, along with the Trust Department. This can be helpful in providing guidance concerning the family dynamics, and can be a wonderful solution for the client who wants the family member to be actively involved in the process, but is not certain of their abilities.