I have spent most of my career serving as an attorney and trusted advisor to wealthy families and trust beneficiaries. Much of this time has been spent as the “client-facing” representative of a corporate trustee. Many times, I see my clients name a series of family members and/or friends as the trustee of trusts for future generations. I understand why they want to do this, especially in light of the trouble facing many banking institutions. I often hear things like, “his dad would roll over in his grave if he knew what that bank trustee was doing.”
Even though I understand the reasons for wanting a family member or friend to serve as trustee, this person may not be prepared for the task ahead. The role of trustee carries with it a great responsibility. The trustee must be able to manage the assets, handle all the ministerial needs of the trust, communicate with and educate beneficiaries, and navigate what can oftentimes be complex family dynamics. These duties can be overwhelming to even the most educated and financially sophisticated trustee.
Hiring a corporate fiduciary, like Argent Trust, as agent for a personal trustee gives the family member or friend a team of professionals who have a passion for serving families, standing behind them as their coach. It provides a deep bench of talent, giving the trustee the guidance and wisdom of professionals who work with beneficiaries and trusts on a daily basis while still allowing him or her to make final decisions.
Argent Trust can help the trustee with all aspects of trust administration, and the areas below are examples of how our expertise can benefit the trustee.
Beneficiary communication and education
One of the most important roles of a trustee is to communicate with the beneficiaries of the trust. In many states, trustees have a duty to make sure that the beneficiaries have the information needed to protect their interest in the trust. While the legal duty is important, experience has taught me that talking with beneficiaries about the trust, why it was set up, and how the creator wanted the beneficiary to use the trust assets for their benefit can have a life-changing, positive impact on the beneficiaries. Having an open line of communication between a trustee and beneficiary will also lead to smoother conversations when the trustee has to say “no,” which reduces the chance of future litigation and sets realistic and reasonable expectations for the future.
Documentation of discretionary distribution decisions
This can be one of the most overlooked areas of trust administration by an individual trustee. Many trust documents give specific guidance regarding the circumstances where a beneficiary can receive a distribution, and often there are things that a trustee needs to consider before making a distribution decision. For example, many documents require the trustee to review financial statements, tax returns or standard of living information before making a discretionary distribution.
Produce a consolidated statement of assets
Many times, trusts will have several brokerage accounts and/or private investments, without a consolidated statement showing the trust’s assets. This can cause confusion for not only the trustee but also for the beneficiaries when they are looking to understand what assets have been set aside for their benefit.
Track income and principal
The tracking of income and principal is a rather confusing and nuanced trust issue, especially for trusts that hold private investments, real estate, and mineral interests. Depending on the terms of the trust agreement, a trustee could breach his or her fiduciary duty by not properly booking income or allocating an expense to its proper category.
Monitor tax compliance
Trusts often have federal income tax filing requirements, which include not only completing the returns but also monitoring the need for quarterly tax payments.
Investing trust assets for the current and future beneficiaries requires the ability to understand the needs of two separate and distinct groups of people, with varying needs and experiences. It is imperative, unless the trust agreement says otherwise, that the trustee consider the needs of both those currently receiving distributions and those who will receive them in the future.
About Argent Trust
If you have been in the financial services industry for very long or worked with families or estate planning attorneys, you have probably heard nightmare stories of working with corporate trustees. Argent Trust, one of the South’s leading trust companies, brings a much-needed personal touch to an industry that, by many accounts, has lost its way. Our brand promise to the individuals and families we serve is to:
- • Serve as a fiduciary, acting in their best interest
- • Be thoughtful, independent and objective
- • Provide a wide array of wealth management solutions
- • Commit to excellence in every phase of our relationship
- • Offer a highly customized client experience through committed and empowered professionals
Please reach out to an Argent Trust professional today to find out how we can help you and your family.