Selecting a corporate trustee to oversee the administration and management of a trust is a challenging and unique decision to make. Think about it, you are picking someone to oversee your hard-earned wealth, yet you will most likely never be able to critique the trustee’s investment performance. With that in mind, while you can give direction on your life goals, views and objectives, an advisor should be working to create a relationship with you built on trust and understanding.

In the event that you should pass away or are no longer able to adequately manage your finances, prevailing thought would hope the advisor could step in as a resource to help guide the next generation. At many investment firms, things rarely go this way but with relatively recent changes in trust laws that result is more attainable.

Banks as Corporate Trustee

Historically, when a trust becomes irrevocable (i.e. the grantor is deceased, incapacitated or the trust has been intentionally made irrevocable to move assets out of an individual’s estate), and a corporate trustee is named in the trust document, it is the corporate trustee’s fiduciary duty to administer the trust and oversee the investments contained therein.1 Typically, regional and national bank holding companies have served as the primary corporate trustee for many trusts, allowing them to manage investments in the trust and simultaneously oversee administrative duties.2

Corporate Trustee Administrative Duties

Administration duties generally involve reviewing distributions to be made out of the trust, producing legally required statements for all beneficiaries, preparing and filing tax returns and other assorted tasks.3 Keeping these roles in-house can be beneficial from a consolidation approach, but there is rigidity as the bank trustee must work within a heightened regulatory framework. Oftentimes, the “advisor” spends more time handling compliance issues or working through tax matters than they do actually servicing the trust beneficiary/client’s needs. In addition, banks are sometimes more conservative by nature and can limit the types of investments a trust will hold.

Registered Investment Advisor as Directed Trustee

Some Registered Investment Advisors establish independent trust companies to meet the demand for a wealth advisor’s trust clients. While adhering to the same fiduciary standards as a typical regional or national bank, independent trust companies may allow for greater flexibility for the advisor to oversee investments and decision-making as it relates to the trust.4

For example, Mariner Trust Company, with its South Dakota charter, allows for clients to establish directed trusts where the trust company serves as the trustee. As trustee, Mariner Trust Company can ensure tax returns are filed in a timely manner and that regulatory requirements are met, while clientfacing duties and investment management are left to the wealth management teams

The separation of roles allows the wealth advisor to spend more time working with clients to establish and manage their wealth plans.

he goal is to help ensure that your wealth is transferred to future generations or charitable organizations through a more meaningful relationship between you and your wealth advisor.

Sources:

1,2,3 “Seven Reasons to Have a Professional Help You Build, Manage and Protect Your Wealth”

4 “Directed Trusts”

This material is provided for informational and educational purposes only. It does not consider any individual or personal financial, legal, or tax circumstances. As such, the information contained herein is not intended and should not be construed as individualized advice or recommendation of any kind. Where specific advice is necessary or appropriate, individuals should contact their professional tax, legal, and investment advisors or other professionals regarding their circumstances and needs. Mariner does not provide legal advice.

Any opinions expressed herein are subject to change. The information is deemed reliable, but we do not guarantee accuracy, timeliness, or completeness. It is provided “as is” without any express or implied warranties.

Mariner Trust Company (“MTC”) is an affiliate of Mariner. MTC is a state chartered public trust company organized under the laws of South Dakota and serves to provide its customers with administrative trust services and other related services. The services provided by MTC are separate from the registered investment adviser entities of Mariner and are subject to additional fees.

Mariner is the marketing name for the financial services businesses of Mariner Wealth Advisors, LLC and its subsidiaries. Investment advisory services are provided through the brands Mariner Wealth, Mariner Independent, Mariner Institutional, Mariner Ultra, and Mariner Workplace, each of which is a business name of the registered investment advisory entities of Mariner. For additional information about each of the registered investment advisory entities of Mariner, including fees and services, please contact Mariner or refer to each entity’s Form ADV Part 2A, which is available on the Investment Adviser Public Disclosure website. Registration of an investment adviser does not imply a certain level of skill or training.